- By PTI
- Mon, 25 Aug 2025 05:41 PM (IST)
- Source:JND
Fitch Maintains 'BBB-' Status For India: The proposed 50 per cent US tariffs on India pose a moderate downside risk to its 6.5 per cent GDP growth forecast for the current fiscal, the agency said.
"India's economic outlook remains strong relative to peers, even as momentum has moderated in the past two years," Fitch said, adding the ratings are supported by its robust growth and solid external finances.
'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'. This was S&P's first upgrade for India in over 18 years.
ALSO READ: OYO Plans To File DRHP In November With Valuation Of USD 7-8 Billion For IPO
Another global rating agency Morning DBRS, had, in May this year, upped India's rating to 'BBB', citing structural reforms.
Fitch's forecast of 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.
It estimates India's medium-term growth potential at 6.4 per cent, led by strong public capex, a private investment pick up and favourable demographics.
ALSO READ: RBI Focused On Growth And Stability Amid US Tariffs, Geopolitical Uncertainties: Guv Sanjay Malhotra
"Proposed goods and services tax (GST) reforms, if adopted, would support consumption, offsetting some of these growth risks," Fitch added.
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," Fitch said.
ALSO READ: Gold Prices In India Fall By Rs 200 To Rs 1,00,170 Per 10 grams; Silver Prices Remained Unchanged
The rating agency said 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.
Fitch, however, flagged fiscal metrics as a credit weakness, given the high deficits and debt compared to 'BBB' peers.
"Lagging structural metrics, including governance indicators and GDP per capita, also constrain the rating," the agency said.