India’s GDP Growth Cut by Fitch to 6.20% for FY25; FY27 Pegged at 6.3%

Fitch Ratings has trimmed its GDP growth forecast for India, reflecting growing concerns over the global economic outlook. The FY25 GDP forecast has been cut by 10 basis points to 6.20%, while the FY26 projection now stands at 6.40%, also 10 basis points lower than previously estimated. For FY27, Fitch expects India’s GDP to grow by 6.30%.

The revision is primarily attributed to a worsening global macroeconomic environment, particularly the impact of the ongoing trade dispute between the United States and China. The agency pointed out that such geopolitical tensions have begun to cast a shadow over global trade flows and economic stability.

RBI Aligns With Lowered Forecast, Cites Trade and Policy Uncertainties

India’s central bank has mirrored the downward adjustment. In its latest Monetary Policy Committee (MPC) meeting, the Reserve Bank of India (RBI) revised FY25 GDP growth down to 6.5%, from its earlier projection of 6.7%.

The announcement came from Governor Sanjay Malhotra, who noted that “global trade and policy uncertainties have led to a 20 basis point reduction in the growth projection for this fiscal year.” This marks the second successive policy update in which the RBI has acknowledged international developments as a core reason for trimming growth expectations.

FY26 Forecast Revised by Central Bank As Well

This recalibration follows an earlier MPC meeting under the new governorship of Sanjay Malhotra, where India’s FY26 GDP growth was projected at 6.7%. That estimate has now also come under review, considering mounting tariff concerns and potential slowdowns in external demand.

The emphasis on both near- and medium-term growth reflects a shift towards macroeconomic caution, driven by developments that extend beyond India’s borders.

Trade War Between US and China at the Core of Slowdown Concerns

The common thread between Fitch’s and RBI’s downward revisions is the ongoing trade war between the US and China, which has intensified in recent months. Heightened tariffs and policy uncertainty are affecting investor sentiment and slowing down trade activity globally.

India, being part of the global supply chain and reliant on both exports and foreign investment, is not immune to these external shocks. Slower international trade growth may translate into muted domestic expansion, especially in sectors heavily dependent on global demand.

Conclusion

With two major institutions lowering growth forecasts for India, the spotlight remains on how global economic developments are influencing domestic expectations. While these are projections based on current information, the evolving nature of geopolitical and trade relationships means further changes could follow.

This adjustment in estimates reflects the increased sensitivity of emerging economies like India to changes in the global economic order.

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