Growth outlook resilient for FY26 but trade risks loom

India's economic growth is expected to remain resilient during FY26, supported by sustained government spending and a potential revival in private investments, several rating agencies said in their FY25 rating assessments released on Tuesday, but warned of risks to exports from escalating US tariffs and a widening trade war.

- Rhik Kundu

NEW DELHI:

India Ratings & Research, a Fitch Group company, said it expects the economy to grow at 6.6% in FY26, but warned that rating actions could moderate during the fiscal year. Rating actions encompass all changes made by a credit rating agency, including initial assignments, revisions, outlook changes, suspensions, and withdrawals.

According to the rating agency, sectors such as power, auto and auto components, road infrastructure, consumer services, and healthcare have performed well with rating upgrades over the past four years, driven by government-led infrastructure investments and strong urban demand.

Improving rural consumption, supported by higher disposable incomes, has further boosted the services sector. However, textiles, construction, and capital goods have faced downward rating actions due to raw material price volatility and rising working capital pressures.