By Bl New Delhi
Copyright thehindubusinessline
Japanese credit rating agency Rating and Investment Information Inc. (R&I) has upgraded India’s long-term sovereign credit rating to ‘BBB+’ from ‘BBB’, while retaining the ‘stable’ outlook for the Indian economy. This is the third rating upgrade as last month after a gap of 17 years, S&P Global upgraded India’s sovereign rating to ‘BBB’ from ‘BBB-’ Prior to that Morningstar DBRS upgraded the rating to ‘BBB’ (from BBB (low)) in May 2025
“Rating upgrades re-affirm India’s position as one of the most dynamic and resilient major economies in the world,” the Finance Ministry said in a statement on Friday. The improved rating is expected to make the country more attractive to foreign investors and help it maintain a higher growth rate.
Explaining the rationale behind rating upgrade, R&I said the Indian government has made progress in reducing the fiscal deficit at a moderate pace, and the government debt ratio will likely fall. In addition, external stability has been strengthened, as seen in the current account deficit staying at a low level, the narrowing negative net international investment position and other factors. “R&I has upgraded the Foreign Currency Issuer Rating to BBB+, based on the said factors including the recognition that the risk related to financial system is limited,” it said.
Further, according to the agency, the ratings upgrade is supported by India’s position as one of the world’s largest and fastest-growing economies, underpinned by its demographic dividend, robust domestic demand, and sound government policies. It also highlights India’s strengthened external stability, reflected in modest current account deficit, stable surpluses in services and remittances, low external debt-to-GDP ratio, and sufficient forex cover.
Limited risks
The agency further stated that the risks associated with the financial system remain limited. “While the government has been increasing capital expenditures, it has managed to reduce the fiscal deficit thanks to the tax revenue increase backed by the strong domestic demand as well as the cut of subsidies,” the agency noted in its statement. The recent increase in tariffs by the US was acknowledged as a risk factor by the agency, however, it observed that India’s limited reliance on US exports and its domestic demand-driven growth model will contain the impact.
It observed that while the GST rationalisation will result in revenue losses, the negative impact will likely be offset to some extent by the stimulation of private consumption.
According to the Finance Ministry, the third credit rating upgrade reflects the increasing global recognition for India’s robust and resilient macroeconomic fundamentals and prudent fiscal management. It also underscores global confidence in India’s medium-term growth prospects amid prevailing global uncertainties. “The Government of India remains committed to building on this momentum through policies that promote inclusive, high-quality growth alongside fiscal prudence and macroeconomic stability,” it said.
Published on September 19, 2025
