Fitch Affirms India BBB- Rating Citing Strong Growth, Moderate US Tariff Risks

Fitch Ratings has reaffirmed India's long-term foreign currency issuer default rating at 'BBB-' with a stable outlook, citing the country's strong economic growth and solid external finances, while also noting fiscal challenges such as high deficits and debt relative to peers. The agency projects India's GDP growth at 6.5% for fiscal year 2026, well above the 'BBB' median, supported by robust domestic consumption and ongoing capital spending. Fitch acknowledged that the Trump administration's planned 50% tariffs on Indian goods represent a moderate downside risk but expects these tariffs to be negotiated lower, with the direct impact on GDP being modest given India's relatively low export dependence on the U.S. (2% of GDP). The tariffs could, however, dampen business sentiment and investment, and limit India's ability to benefit from supply chain shifts from China if tariffs remain higher than those on Asian competitors. Proposed Goods and Services Tax (GST) reforms in India, if implemented, may help offset some growth risks by supporting consumption. Fitch's rating affirmation follows a recent upgrade by S&P Global Ratings, which raised India's rating to 'BBB' from 'BBB-' for the first time in 18 years, reflecting buoyant economic growth and government commitment to fiscal consolidation.