Article - India Gets 3rd Credit Rating Upgrade in 2025

Jai Siya Ram http://www.fxlive.in/ Here are the full details about India’s 3rd credit rating upgrade in 2025: the R&I (Japan) upgrade to BBB+ with stable outlook — what it means, why it happened, and what to watch. What’s the news On 19 September 2025, Japanese agency Rating & Investment Information, Inc. (R&I) upgraded India’s long-term sovereign credit rating from BBB to BBB+, maintaining a Stable outlook. This is India’s third sovereign rating upgrade in five months. The first two were: Morningstar DBRS (from BBB(low) → BBB) in May 2025 S&P Global (from BBB- → BBB) in August 2025 Why the upgrade was given — R&I’s reasons R&I’s upgrade reflects several improvements and strengths in India’s economy. Key factors: Domestic demand-led growth India’s economy is being driven by consumption, investment, and strong momentum at home rather than being overly dependent on exports. Improved fiscal discipline The government has shown progress in reducing the fiscal deficit. There have been subsidy rationalisations. Tax revenues have been buoyant, helping government accounts. External stability / macro stability Features cited include a modest current account deficit, strong remittances, and good foreign exchange reserves. India has “manageable level of debt” and outlook for debt/GDP ratio is improving. Government policy & institutional strength Efforts to attract foreign manufacturers, improve infrastructure, strengthen legal/institutional frameworks, reduce dependence on energy imports are viewed positively. GST rationalisation (reducing tax slabs) also noted; though it may reduce some revenue, it is expected to stimulate consumption. Risks considered limited R&I says financial system risk is limited. Some external risks exist (e.g. U.S. tariffs) but India’s exposure through those channels is not overly high. What’s the significance Investor confidence: Upgrades tend to reduce borrowing costs for government and private sector, increase inflows of foreign investment. Lower risk premium: Debt-instruments (government bonds) may get more favourable terms. Global perception: Signals to international investors, rating markets, that India is strengthening, especially during global economic uncertainties. Policy validation: Validates India’s policies on infrastructure spending, macro management, subsidy rationalisation, etc. What’s the significance Investor confidence: Upgrades tend to reduce borrowing costs for government and private sector, increase inflows of foreign investment. Lower risk premium: Debt-instruments (government bonds) may get more favourable terms. Global perception: Signals to international investors, rating markets, that India is strengthening, especially during global economic uncertainties. Policy validation: Validates India’s policies on infrastructure spending, macro management, subsidy rationalisation, etc. What remains uncertain / challenges & watch-outs Consistency of growth: Maintaining growth in the mid-6% range is a challenge: global headwinds (inflation, interest rates, supply shocks) could slow momentum. Fiscal discipline: Keeping fiscal deficit under control, especially as government spends on infrastructure, welfare, subsidies etc. If deficit widens, rating could be at risk. External risks: U.S. tariffs, trade frictions, global economic slowdown could affect export demand & commodity prices. Inflation / monetary policy: Tight monetary policy globally might affect debt servicing costs. Weather, agriculture, global supply chain shocks are always wildcard risks for India. Regards FXLive Chandan ((Tecnical Research Analyst in MCX Commodity + Cash Equity & Future/Options ))