Fitch retains FY26 India growth at 6.5%

New Delhi: India’s low reliance on external demand is expected to shield the country from US trade policies, Fitch Ratings said Wednesday. While India’s economic growth forecast for FY26 is unchanged at 6.5% from the December outlook, the projection for FY27 was revised upwards by 10 basis points to 6.3%.

This fiscal year, India’s GDP is anticipated to grow by 6.3%, the global rating agency said.

Consumer spending will pick up pace in the coming two fiscals, albeit at a slower pace, it noted.

The Indian economy gained momentum in the December quarter, expanding 6.2% from a seven-quarter low of 5.6% in the quarter before, led by improved consumer spending and higher government expenditure.

The ratings agency forecasts growth of 7.1% in Q4 of FY25 and 6.8% in Q1 of FY26.

“Business confidence remains high and lending surveys point to continued double-digit growth in bank lending to the private sector,” Fitch said in its Global Economic Outlook.It also expects a pickup in capital spending in FY26 and FY27.Global growth is expected to slow to 2.3% in 2025 and 2.2% in 2026, from 2.9% in 2024, according to Fitch. GDP growth in US will slow to 1.7% in 2025 and 1.5% in 2026, following 2.8% in 2024.

Inflation in India is projected to decline to 4% by the end of December due to falling food prices.