More Stories

Informist, Wednesday, Sept. 10, 2025

 

Please click here to read all liners published on this story

--Fitch:See US trade relation issues dampen India business sentiment, invest 
--Fitch: See US' extra 25% tariff on India to be eventually negotiated lower 
--Fitch: See India inflation to pick up to 3.2 25-end, 4.1% by 2026-end 
--Fitch: Expect India GDP growth to slow to 6.3% in FY27, 6.2% in FY28 
--Fitch: See GST reforms modestly boosting consumer spending FY26, beyond 
--Fitch: See RBI to start raising repo rate in 2027 
--Fitch: See RBI cut repo rate by 25bps towards end of this year 
--Fitch: Looser fincl conditions to feed through investment 
--Fitch: Domestic demand key driver of growth on strong consumer spending 
--Fitch: Up India FY26 GDP growth forecast to 6.9% from 6.5?rlier

 

NEW DELHI – Fitch Ratings on Wednesday raised its forecast for India's GDP growth for the current financial year to 6.9% from 6.5% projected in June. "Domestic demand will be the key driver of growth as strong real income dynamics support consumer spending and looser financial conditions should feed through to investment," the rating agency said.

 

According to latest government data, India's GDP grew more than expected at a five-quarter high of 7.8% in Apr-Jun, led by higher growth in services and manufacturing sectors. Fitch, however, cautioned that "annual growth will slow in the second half of the financial year, and so we expect growth to slow in FY27 to 6.3%. With the economy operating slightly above its potential, we expect growth will edge down to 6.2% in FY28."

 

Fitch said low food prices have pushed headline inflation down to 1.6% in July, which is lowest since June 2017. "We expect food price pressures will remain weak, in the context of above-average monsoon rainfall and high food stockpiles, so that inflation will only pick up to 3.2% by end-2025 and 4.1% by end-2026," it said. According to an Informist poll of 12 economists, CPI inflation in India may rise to 2.1% in August from an eight-year low in July because of fading away of the statistical effect of a favourable base and a rise in food and gold prices.

 

Further, the rating agency expects the Reserve Bank of India to cut repo rates by 25 basis points towards the end of the year, as it assesses the impact of the policy loosening already implemented, and that rates will stay there until end-2026. "We expect the RBI to start raising rates in 2027," Fitch said.

 

Fitch expects the goods and services tax reforms announced by the government will modestly boost consumer spending over the remainder of this and the next fiscal years. The GST Council last week decided to overhaul the tax regime by tweaking the four-slab GST structure of 5%, 12%, 18%, and 28% to a two-slab structure of 5% and 18%. The council also introduced a new GST rate of 40%, to be imposed on sin and luxury goods. All new rates, except for those on tobacco products, will take effect Sept. 22.

 

The GST reforms will help offset any adverse impact of the US' tariffs especially if they turn out to be prolonged, by compensating with domestic demand boost, Chief Economic Adviser V. Anantha Nageswaran had earlier said Wednesday. Citing displeasure over the high trade gap, the US has imposed a 25% reciprocal tariff on India, with an additional 25% as punitive tariff for maintaining trade relationship with Russia, especially for procuring Russian crude oil.

 

 

 

"Trade tensions with the US have increased in recent months, with the US imposing an additional 25% tariff on imports from India. We expect this will eventually be negotiated lower, but the uncertainty around trade relations will dampen business sentiment and potentially investment," Fitch said.

 

In August, Fitch Ratings affirmed India's long-term foreign-currency issuer default rating at 'BBB-' with a stable outlook. Fitch had said India's fiscal metrics are a credit weakness, with high deficits, debt and debt service compared to its 'BBB' peers. "Lagging structural metrics, including governance indicators and GDP per capita, also constrain the rating," it said.  End

 

Reported by Sagar Sen

Edited by Akul Nishant Akhoury

 

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.