Fitch Reaffirms India’s Credit Rating at BBB- with Stable Outlook

Global credit rating agency Fitch Ratings has affirmed India’s long-term foreign-currency issuer rating at ‘BBB-’ with a stable outlook. The agency highlighted that India’s robust growth, strong external finances, and structural reforms remain key strengths supporting its economic outlook.

According to Fitch, India’s economy is projected to grow at 6.5% in FY26, aided by strong government capital expenditure, private consumption, and reforms such as GST. These factors are expected to strengthen fiscal credibility and support macroeconomic stability.

Growth Drivers and Risks

Fitch underlined that India’s demand growth continues to be solid, supported by policy measures and improving consumption trends. Structural improvements in GDP per capita and fiscal reforms are expected to push India’s growth trajectory upward.

However, Fitch flagged India’s high debt burden as a persistent weakness that could weigh on future ratings. While external finances are resilient, reducing debt levels will remain a key challenge.

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Tariff Concerns with the US

On the global front, US President Trump’s recent tariffs on India pose a moderate downside risk. Fitch believes the proposed 50% tariff would create short-term uncertainty but expects it will “eventually be negotiated lower” through discussions.

Market Insights & Updates

• Stable outlook signals investor confidence, despite fiscal challenges.

• 6.5% FY26 growth forecast reinforces India’s position as one of the fastest-growing major economies.

• Tariff risks add uncertainty, but negotiations may ease the impact.

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