In August 2025, Fitch Ratings Inc., an American credit rating agency, released its latest report titled ‘India Corporates Credit Trends: July 2025 ’. In this report, India’s Gross Domestic Product (GDP) growth forecast for Financial Year 2025-26 (FY26) was revised downward to 6.3%, from its previous estimate of 6.4% in its Global Economic Outlook (GEO) report published in April 2025.
- The global credit rating agency cited a limited direct impact on Indian corporates from the higher tariffs imposed by the United States of America (USA) due to generally low to moderate the USA export exposure.
- However, it cautioned about potential ‘second-order risks’ which may arise from global excess supply.
Exam Hints:
- What? Release of ‘India Corporates Credit Trends: July 2025’ Report.
- Released by: Fitch Ratings Inc.
- India’s GDP: 6.3% for FY26
- Basis points (bps) decrease: 10 bps (FY26)
- Previous Projection: 6.4%
- India’s GDP forecast by S&P: less than 6.2% for FY26
Key Findings:
Increase in Demand across Core Sectors: The report also highlighted that robust infrastructure spending is expected to boost the healthy demand across core sectors such as: Cement and Building Materials; Electricity; Petroleum Products; Steel; and Engineering & Construction (E&C) in FY26.
Improvement in Credit Metrics: The report has projected that credit metrics will improve for rated Indian Corporates in FY26 as wider Earnings Before Interest, Tax Depreciation, and Amortisation (EBITDA) margins are projected to offset the effects of high capital expenditure (capex).
Decline in Aggregate Revenue: As per the report, combined revenue of Indian corporates is expected to decline by 3% in FY26, driven by a high-single-digit decline for the oil and gas production, and oil refining and marketing companies.
Sectors to Remain Insulated from USA Tariffs: The report has outlined certain sectors focused on the domestic market such as oil and gas upstream and downstream, cement and building materials, E&C, among others, expected to see minimal direct effects of USA tariffs due to strong local demand and regulatory stability.
- However, the report highlighted that tariff uncertainty may dampen discretionary Information Technology (IT) and auto supplier exports to the USA and Europe in FY26, while potential US policy shifts could affect pharmaceuticals.
S&P Report Anticipates India’s GDP for FY26 Could Fall Below 6.2%
GDP Projection for FY26: In August 2025, S&P Global Market Intelligence (MI) released its latest report and warned that India’s GDP could fall below 6.2% in FY26 if the 25% tariff imposed by the USA continues in effect post September 2025.
Previous Projection: The rating agency has projected India’s GDP at 6.2% for FY26 in July 2025, 30 basis points (bps) down from a GDP growth of 6.5% in FY25.
Key Concerns: The report has raised concerns over India’s exposure to Section 232 which includes ‘national security’ tariffs on exports such as electronics and pharmaceuticals, accounting for 12.3% and 17.8% of Indian exports to the USA, respectively.
About Fitch Ratings Inc.,:
President- Ian Linnell
Headquarters- New York, the United States of America (USA)
Established- 1914
