Fitch Ratings has revised India’s growth outlook upward, projecting the economy to expand 6.9% in FY25, up from its earlier estimate of 6.5%. The revision comes on the back of stronger-than-expected GDP growth in the April–June quarter and resilient domestic consumption, according to the agency’s September edition of the Global Economic Outlook (GEO).
Fitch Raises India GDP Forecast to 6.9% for FY25
India’s real GDP grew 7.8% year-on-year in the April–June quarter, compared to 7.4% in the previous quarter. Fitch had earlier estimated 6.7% growth for Q1 in its June GEO report. The agency said robust consumer demand and supportive income trends were major factors driving the upward revision.
Trade Tensions with US Add Uncertainty
While India’s domestic growth momentum remains strong, Fitch flagged rising trade frictions with the United States as a risk. The US recently imposed an additional 25% tariff on Indian goods, effective August 27, raising total duties to 50%. Fitch expects these tariffs to be negotiated lower eventually but cautioned that uncertainty may dampen investor sentiment and slow new investments.
GST Reforms to Boost Consumption
Fitch highlighted that the Indian government’s Goods and Services Tax (GST) reforms, set to take effect on September 22, should modestly enhance consumer spending through FY25 and FY26. Looser financial conditions are also expected to encourage investment, supporting domestic demand as the primary growth driver.
Outlook for FY26–FY28 and RBI Policy
- Growth is projected to moderate to 6.3% in FY26 and further to 6.2% in FY28.
- Inflation is expected to stay under control, with price pressures remaining weak due to healthy food stockpiles and above-average monsoon rainfall. Fitch projects inflation at 3.2% by end-2025 and 4.1% by end-2026.
- Fitch anticipates the RBI will cut rates by 25bps towards the end of 2025 and maintain that stance until 2026, before resuming rate hikes in 2027.
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