More Stories

Informist, Wednesday, Aug. 27, 2025

 

Please click here to read all liners published on this story

--Fin min: S&P rtg upgrade to BBB underscores India's resilient growth 
--CONTEXT: Comments from fin min's Monthly Economic Review report for July 
--Fin min: Indian economy continued to reflect resilience in July 
--Fin min: Next-gen reforms, sovereign rating upgrade to lower borrow costs 
--Fin min:Next-gen reforms, sovereign rtg upgrade to attract foreign capital 
--Fin min: Next-gen reforms, rtg upgrade to bolster investment, consumption 
--Fin min:Near-term risks to econ remain due to tariff-related uncertainties 
--Fin min: US tariffs pose challenges to India, must address them 
--Fin min: Trade pacts with other nations may not fully offset US tariff hit

 

NEW DELHI – The planned rollout of next-generation reforms over the next few months and the recent sovereign rating upgrade will boost India's growth even as near-term risks to economic activity remain from the US tariff-related uncertainty, the finance ministry said Wednesday. 

 

The Indian economy, particularly exports and capital formation, faces risks from the imposition of tariffs by the US. The 25% tariff by the US on imports from India increased to 50% on Wednesday, making India one of the countries impacted the most by Washington's duties. If sustained, the 50% tariff could hurt India's growth by nearly half a percentage point.

 

Amid risks from US tariffs, Prime Minister Narendra Modi has announced the next set of reforms, including the overhaul of the Goods and Services Tax regime, under which the number of tax slabs will be reduced to two from the current four. The recent upgrade to India's sovereign rating by S&P Global Ratings to 'BBB' from 'BBB-' also comes as a positive for the economy. 

 

The proposed reforms and the rating upgrade are set to "reduce borrowing costs, attract foreign capital, and bolster investment and consumption", the finance ministry said in its Monthly Economic Review report for July. "These reforms mark the beginning of an accelerated phase of governance transformation, ensuring that India extends its own line of progress, becoming more resilient, inclusive, and globally competitive in an era of rising global economic self-interest."

 

The ministry said the rating upgrade was "well-deserved" and underscored India's resilient growth, anchored inflation expectations, and stronger credit metrics, underpinned by fiscal consolidation and improved quality of spending. Economic activity, which gained momentum in the June quarter, reflected resilience in July as well, the ministry said. 

 

India's GDP growth is expected to have declined to 6.7% in the June quarter from 7.4% in the March quarter. Despite the expected moderation, GDP growth is still seen higher than the Reserve Bank of India's forecast of 6.5%. The statistics ministry will release GDP data for the quarter ended June at 1600 IST on Friday.

 

"The assessment (by S&P) comes at a moment when the economy has exhibited considerable resilience in the face of global challenges, with strong domestic demand and prudent policy management contributing to economic stability,"the finance ministry said in the report. "That said, a few downside risks remain."

 

The ministry said the immediate impact of US tariffs on Indian exports appeared limited, but the secondary and tertiary effects on the economy posed challenges that must be addressed. "In this context, the ongoing India-US trade negotiations will be crucial."

 

While negotiations on a trade pact with the US have stalled, the Indian government is looking to diversify its trade strategy. India recently signed a free trade agreement with the UK, and negotiations are underway with the European Union, New Zealand, Chile, and Peru. Commerce Minister Piyush Goyal last week said India is likely to conclude the free trade agreement with Oman by next month, and the pact with New Zealand should be over in the next "couple of months". 

 

"But, these initiatives will take time to show results and may not fully address the shortfall in exports to the United States that may arise if the current tariff rates on India persist," the finance ministry said.

 

Amid global uncertainties, the government is charting a growth trajectory driven by long-term reforms, the ministry said. The deregulation efforts by states, such as lifting restrictions on women working night shifts and improving the ease of doing business, will further enhance productivity and stimulate economic growth, the ministry said.  End

 

Reported by Shubham Rana

Edited by Avishek Dutta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.