Moody's on Friday upgraded India's credit rating for the first time in more than a decade, citing economic reforms introduced under Prime Minister Narendra Modi.

The move comes almost two months after the Moody's and Standar & Poor's lowered their ratings on regional rival China citing the country's ballooning debt burden.

Moody's raised its rating on India to Baa2 from Baa3, the first such move since January 2004, saying recent reforms would enhance productivity, stimulate foreign and domestic investment and foster "strong and sustainable growth".

These include a new national goods and services tax and a controversial 2016 ban on high-value bank notes aimed at tackling widespread tax evasion.

"Continued progress on economic and institutional reforms will, over time, enhance India's high growth potential," the agency said.