On Friday, Japanese credit rating agency Rating and Investment Information (R&I) upgraded India's long-term sovereign credit rating to 'BBB+' from 'BBB' and maintained a "stable" outlook, citing growth prospects, progress on fiscal consolidation, and government reforms. This is the third upgrade by a sovereign credit rating agency this year, after S&P upgraded to 'BBB' (from BBB-) in August and Morningstar DBRS upgraded to 'BBB' (from BBB(low)) in May 2025.
Key Highlights
- R&I raises India’s sovereign rating to BBB+ from BBB, citing strong growth, fiscal discipline.
- This marks India’s third upgrade in FY26, reflecting improved macro-fundamentals and external stability.
R&I stated that the tariffs imposed by the US will have a limited impact on the Indian economy. "The United States has raised its tariffs on India to 50%.While this may pose a risk factor for the economic outlook, India's economy is primarily driven by domestic factors, and its reliance on exports to the US is not high," The ratings agency said in a statement that the GST rate reduction, which takes effect on September 22, would help to mitigate the impact.
According to the agency, the economy will continue to grow at a mid-6% rate beginning in FY26, owing to population growth, the catch-up effect of income, and the government's public investment and economic policy, among other factors.
Also Read: GDP Growth Pegged at 6.7% in Q1 FY26 on Urban Demand Boost
The government welcomed the rating agency's decision. "Three credit rating upgrades for India in five months reflect increasing global recognition for India's robust and resilient macroeconomic fundamentals and prudent fiscal management and underscore global confidence in India's medium-term growth prospects amid prevailing global uncertainties," according to a public statement.
The rating agency stated that the government is working to reduce the fiscal deficit, which fell to 4.8% of GDP in FY24. "While govt has been increasing capital expenditures, it managed to reduce the fiscal deficit, thanks to the tax revenue increase backed by strong domestic demand as well as the cut of subsidies," reports R&I.
