Moody’s Investors Service has said that though India is least vulnerable to a balance of payment crisis because of its diversified export sector and better macroeconomic policy management, the country including other South Asian economies has very low exports as a share of GDP.

The international credit rating agency said in a report that when compared with other South Asian economies, India is in a relatively better position to solidify its integration with global value chains and increase exports.

India’s adequate forex reserves which come on the back of better macro-economic policy management is one of the reasons the country can integrate itself into the global supply chain.

However, the country is likely to face challenges in becoming more export-oriented.

Moody’s said the Centre will have to undertake major reforms to increase India’s export competitiveness, which may not be politically easy as it would have to bring down protection in certain businesses.

The report — Sovereigns — South Asia, Low Trade Openness Fuels Vulnerability to Shocks and Curbs Growth in the longer run — said Pakistan and Sri Lanka are the most vulnerable. The other countries in the study are Bangladesh and India.

It added that the other nations have seen major BoP pressures because of low exports and foreign direct investment (FDI), coupled with much weaker policy management and higher political risk.

However, India is the least vulnerable of the four.

A report from Business Recorder quoting the agency said that for Sri Lanka and Pakistan, low trade openness and weakly diversified export baskets combined with weak macroeconomic policy management and higher political risks have contributed to low foreign exchange reserves to buffer against shocks.

Within South Asia, Pakistan and Bangladesh have the lowest level of exports as a percentage of GDP.