Fitch Ratings Downgrades India's GDP Projection Amid US Tariff Concerns

Fitch Ratings has revised India's GDP growth projection to 6.3% for the current fiscal, attributing minor direct impacts from US tariffs on Indian corporates. Despite robust infrastructure spending, sectors like IT and auto exports may face challenges due to tariff uncertainties and potential US policy shifts.

Fitch Ratings has downgraded India's GDP growth forecast for the current fiscal year to 6.3%, citing limited direct impacts from increased US tariffs on Indian corporates. Initially, Fitch had projected a 6.4% growth for the fiscal year 2025-26 in its Global Economic Outlook report.

The report highlights that robust infrastructure spending will continue to support healthy demand for various sectors, including cement, building materials, and engineering, amidst evolving tariff scenarios. Fitch anticipates an enhancement in credit metrics for rated Indian corporates by the end of FY26, driven by wider EBITDA margins balancing their significant capital expenditure.

While the direct impact of US tariffs is expected to be limited, secondary risks, such as excess supply, may pose challenges. Trade negotiations between India and the US could influence final outcomes, with New Delhi's firm stance on duty concessions being a key factor in the ongoing talks.