Fitch Ratings has affirmed India’s sovereign credit rating at ‘BBB-’ with a stable outlook. This is the lowest investment-grade rating. The agency’s decision is underpinned by India’s robust economic growth and solid external finances. Fitch’s forecast for India’s GDP growth is 6.5% for the fiscal year ending March 2026 (FY26), which is unchanged from FY25. This figure is significantly higher than the median of 2.5% for other countries with a ‘BBB’ rating. The agency also projects India’s medium-term growth potential at 6.4%, driven by strong public spending on infrastructure, a potential pick-up in private investment, and favorable demographics.
Key Highlights:
- Fitch identified the proposed 50% US tariffs on Indian exports as a moderate downside risk to its growth forecast.
- However, it believes the direct impact on GDP will be modest since exports to the US account for only 2% of GDP.
- The report notes that proposed Goods and Services Tax (GST) reforms could help mitigate these risks by supporting consumption.
- The proposed GST reforms include a simplified two-tier rate structure of 5% and 18% for most goods and services, and a 40% rate for “sin” or luxury goods, which would replace the existing 12% and 28% slabs.
Comparison with Other Agencies
- The affirmation of India’s rating by Fitch comes shortly after two other global rating agencies upgraded India.
- S&P Global recently upgraded India’s credit rating by a notch to ‘BBB’, its first upgrade for the country in over 18 years.
- Morningstar DBRS also upgraded India’s rating to ‘BBB’ in May 2025, citing the country’s structural reforms.