India's relaxation of foreign investment rules credit positive: Moody's

Mumbai: India`s decision to relax foreign direct investment in sectors including defence, aviation, and retail is a positive development for the country`s sovereign ratings, said Moody`s Investors Service on Monday.

"The announcement is credit positive because it demonstrates a continuation of reform momentum and paves the way for private investment and a boost in productivity," said Moody`s.

India announced last week sweeping reforms to rules on foreign direct investment and easier terms for investors in sectors ranging from civil aviation to pharmaceuticals.

But Moody`s warned reforms have stalled in passing a revamped goods and services tax and land acquisition rules.

"We expect that political division will keep the reform process uneven and slow-moving," Moody`s said.

Moody`s currently rates India at "Baa3", the lowest investment-grade rating, with a "positive" outlook.