Fitch Ratings announced on Wednesday that it has increased India’s GDP growth forecast for the current fiscal year to 6.9 percent, up from a previous estimate of 6.5 percent. This revision is attributed to strong growth in the June quarter and demand driven by domestic consumption. Fitch is the first major global rating agency to revise its GDP growth estimates upward for India this fiscal year, following a series of downward adjustments by various agencies earlier this year due to uncertainties related to trade and tariffs. In its September Global Economic Outlook (GEO), Fitch noted a significant acceleration in economic activity between the March and June quarters of the current fiscal year.
The real GDP growth for the April-June period increased to 7.8 percent year-on-year, compared to 7.4 percent in the January-March quarter. Earlier, in its June GEO report, Fitch had projected a 6.7 percent growth for the April-June quarter. Citing the strong performance in the second quarter, Fitch has adjusted its forecast for the fiscal year ending March 2026 (FY26) to 6.9 percent from 6.5 percent. Additionally, Fitch pointed out that trade tensions with the US have escalated recently, with the US imposing an additional 25 percent tariff on imports from India, effective August 27, resulting in a 50 percent duty on Indian goods in the US.
Although there is an expectation that this situation will be negotiated down, the uncertainty surrounding trade relations is likely to affect business sentiment and investment. The Indian government has implemented reforms to the Goods and Services Tax, effective from September 22, which are expected to modestly enhance consumer spending in the remainder of this fiscal year and the next.
