Revised GDP Forecast Amid Global Economic Shifts

Fitch Ratings has adjusted its GDP growth projection for India to 6.3% for the current financial year, down from an earlier estimate of 6.4%. The agency cites limited direct impact from recent US tariffs on Indian corporates, attributing resilience to robust infrastructure spending and strong local demand.

Infrastructure and Local Demand: Key Growth Drivers

According to Fitch, sectors such as cement, building materials, electricity, petroleum products, steel, and engineering and construction are expected to benefit from sustained demand. This optimism is rooted in India's ongoing infrastructure investments and domestic consumption trends.

Trade Tariffs and Corporate Credit Metrics

While the direct effect of US tariffs on Indian companies is deemed minimal, Fitch warns of potential second-order risks from global excess supply. Nonetheless, the agency anticipates an improvement in credit metrics for rated Indian corporates in FY26, supported by wider EBITDA margins.

Looking Ahead: Trade Negotiations and Sectoral Impacts

As India and the US navigate trade deal negotiations, sectors with a domestic focus are likely to remain insulated from tariff-related disruptions. However, industries reliant on discretionary exports, such as IT services and automotive components, may face challenges. Pharmaceuticals, steel, and chemicals also emerge as areas vulnerable to policy shifts and global market dynamics.