Fitch Retains India’s Sovereign Credit Rating
The rating agency also said that India’s robust growth and solid external finances have supported the rating. ‘BBB-‘ is the lowest investment grade rating and comes within a fortnight of another global rating agency S&P upgrading India's credit rating by a notch to ‘BBB’, which was S&P’s first upgrade for India in over 18 years
New Delhi: Citing the country’s strong public capital expenditure, private investment pick-up and upcoming next-gen GST reforms, leading rating agency Fitch Ratings on Monday retained India’s sovereign credit rating at ‘BBB-‘ with a stable outlook on robust growth and external finances. It also noted that the proposed 50 per cent US tariffs on India from August 27 pose a moderate downside risk to its 6.5 per cent GDP growth forecast for the current fiscal.
The rating agency also said that India’s robust growth and solid external finances have supported the rating. ‘BBB-‘ is the lowest investment grade rating and comes within a fortnight of another global rating agency S&P upgrading India's credit rating by a notch to ‘BBB’, which was S&P’s first upgrade for India in over 18 years.
Another global rating agency Morning DBRS, had, in May this year, upped India’s rating to ‘BBB’, citing structural reforms. Fitch’s forecast of the country’s economy or GDP growth at 6.5 per cent in the fiscal year ending March 2026 (FY26) is unchanged from FY25, and well above the ‘BBB’ median of 2.5 per cent.
The Fitch Ratings also estimates that India’s medium-term growth potential at 6.4 per cent, led by strong public capex, a private investment pick up and favourable demographics. “Proposed goods and services tax (GST) reforms, if adopted, would support consumption, offsetting some of these growth risks,” the ranting agency said.
The Centre has proposed to the group of ministers on GST rate rationalisation a 2-tier rate structure of 5 and 18 per cent for 'merit' and 'standard' goods and services, and a 40 per cent rate for 5-7 goods. The proposal entails doing away with the current 12 and 28 per cent tax slabs.
“The government’s deregulation agenda and GST reforms should support incremental growth. Passage of other significant reforms, especially on land and labour laws, seems politically difficult. Still, some state governments are likely to advance such reforms. India has signed several bilateral trade agreements, but trade barriers remain relatively high,” it said.
The rating agency also said that a strengthening record on delivering growth with macro stability and improving fiscal credibility should drive a steady improvement in India's structural metrics, including GDP per capita, and increase the likelihood that debt can trend modestly downward in the medium term.
