Japan's R&I upgrades India's sovereign rating to BBB+

India on Friday secured its third sovereign credit rating upgrade this fiscal year, with Japan’s Rating and Investment Information Inc (R&I) raising the country’s “currency issuer rating” from BBB to BBB+ with a stable outlook. The upgrade reflects India’s strong domestic demand, fiscal discipline, and improved external stability.R&I also affirmed India’s foreign currency short-term debt rating at a-2. The announcement follows a series of recent upgrades, including S&P Global’s move last month to raise India’s long-term sovereign credit rating to ‘BBB’ from ‘BBB-’, and Canada-based Morningstar DBRS’ upgrade in May to ‘BBB’ (from BBB (low)).
The Union Finance Ministry welcomed the development, noting, “Three credit rating upgrades for India in five months reflect increasing global recognition for India’s robust and resilient macroeconomic fundamentals and prudent fiscal management, and underscore global confidence in India’s medium-term growth prospects amid prevailing global uncertainties.” The ministry added that the government remains committed to promoting inclusive, high-quality growth while ensuring fiscal prudence and macroeconomic stability.
Sovereign rating upgrades are expected to lower borrowing costs and enhance predictability in accessing foreign funds for both the government and private sector. Analysts say the back to back upgrades highlight global investor confidence in India’s growth trajectory despite headwinds such as tariff tensions with the United States.R&I acknowledged the recent hike in U.S. tariffs on Indian goods to 50% as a potential risk but noted that India’s economy remains largely domestic-driven with limited reliance on exports to the U.S. On the recent Goods and Services Tax (GST) rate cut, the agency said its overall impact on the economy would be contained.
Explaining the rationale for the upgrade, R&I cited India’s gradual fiscal deficit reduction, prospects for a declining government debt ratio, and strengthened external stability. The agency noted that India’s current account deficit remains at a low level and the country’s net international investment position has improved.On growth prospects, R&I projected that India would maintain a real GDP growth rate in the mid-6% range from FY2026 onwards, supported by population growth, rising incomes, public investment, and pro-growth government policies. This aligns with the Reserve Bank of India’s forecast of 6.5% growth for FY2026.R&I, however, underscored the need for accelerated growth to meet the government’s long-term ambition of making India a developed economy by 2047. “Eyes are on the government's moves to see whether it will be able to upgrade the economic growth structure while tackling social issues such as poverty and unemployment alongside pursuing fiscal consolidation,” it said.

(Business Correspondent)