Here’s the English version of your full text:
Fitch Retains India’s Credit Rating at ‘BBB-’ with Stable Outlook; Projects 6.5% GDP Growth for FY26
Global credit rating agency Fitch Ratings has affirmed India’s sovereign credit rating at ‘BBB-’ with a stable outlook. The agency stated that India’s GDP growth rate could rise at a strong pace of 6.5% in FY2026. According to Fitch, proposed reforms in GST along with other policy measures will support this growth. However, India’s high debt levels will remain a weakness for its credit quality.
Uncertainty over ‘Trump Tariffs’
Fitch has warned that U.S. President Donald Trump’s proposal to impose a 50% tariff on India poses a risk to the country’s growth outlook. However, the agency expects that these tariffs will “eventually be reduced.”
Fitch highlighted that U.S. exports account for only 2% of India’s GDP, so the direct impact of tariffs will be “limited.” Still, uncertainties around tariffs could weaken investment and business sentiment. The rating agency also noted that if tariffs on India remain higher compared to other Asian countries, the benefits from the ‘China+1’ strategy could diminish.
GST Reforms and Policy Measures
Fitch expects India’s GDP growth in the current fiscal year to remain around 6.4%, supported by government capital expenditure, gradual improvement in private investment, and favorable demographics. It added that the government’s deregulation agenda and GST reforms will boost demand. However, major reforms such as land and labor laws still appear politically challenging, though some states may push ahead more aggressively.
The agency also pointed out that India has recently signed several bilateral agreements with other countries, but trade barriers still remain relatively high.
Strong Demand, Weak Private Investment
Fitch noted that India’s growth momentum has slowed somewhat over the past two years, but it remains strong compared to other developing economies. Domestic consumption is expected to remain robust, supported by government capital expenditure. However, private investment could continue to grow at a slower pace, particularly due to risks linked to U.S. tariffs.
Two Factors That Could Upgrade India’s Rating
Fitch identified two major factors that could lead to an upgrade in India’s rating in the future:
-
A stronger private investment cycle supporting medium-term high growth.
-
The government demonstrating a credible commitment to reduce the debt-to-GDP ratio sustainably.
Risks of a Downgrade
On the downside, Fitch cautioned that if fiscal consolidation stalls, the government’s debt-to-GDP ratio rises, or growth outlook weakens, there could be a risk of a rating downgrade.
Fiscal Health Estimates
Fitch estimates that India’s fiscal deficit could decline to 4.4% of GDP in FY26, and further to 4.2% in FY27 and 4.1% in FY28. However, higher capital expenditure, increased salaries and pensions due to the 7th Pay Commission recommendations, and a possible revenue dip from GST reforms may limit the pace of deficit reduction.
Disclaimer: The views and investment advice shared on tradewithmohib are those of experts/brokerage firms, not of the website or its management. tradewithmohib advises users to consult a certified financial expert before making any investment decisions.
👉 Do you want me to also create a short SEO-optimized summary (like a meta description) for this article so it can rank well on Google?
0 Comments