S&P Global Ratings has maintained its forecast for India’s GDP growth at 6.5% for the current fiscal year, which ends on March 31, 2026. The ratings agency cited robust domestic demand as the primary driver, supported by a favorable monsoon season, recent cuts to income and goods and services taxes, and accelerated government investments. This forecast comes after India’s GDP grew at a strong 7.8% in the April-June quarter. S&P’s assessment is detailed in its Economic Outlook Asia-Pacific Q4 2025 report, which noted that while resilient domestic demand is a common theme across the region, external headwinds are a concern, particularly from new U.S. import tariffs.
The agency also expects the Reserve Bank of India (RBI) to implement a 25 basis points rate cut within this fiscal year. This anticipation is based on a revised, lower inflation forecast of 3.2%, which S&P attributes to a sharper-than-expected decrease in food inflation. The lower inflation rate, according to the report, provides the central bank with the necessary room for monetary policy adjustments. However, S&P also highlighted a significant challenge for India, noting that the country has been “hit much harder than expected” by the new U.S. tariffs compared to other Asian economies, which could shape its export outlook and role in regional supply chains.
