S&P Global Ratings has upgraded India’s long-term sovereign credit rating to ‘BBB’ from ‘BBB-’, assigning a Stable Outlook, in the country’s first rating increase since 2007.
The move reflects stronger domestic demand, reduced dependence on external trade, and improved fiscal resilience, which have helped India absorb the impact of U.S. tariffs of 50% on its exports, sanctions introduced by President Donald Trump in response to India’s imports of Russian oil.
S&P projects the government’s debt-to-GDP ratio will decline from 83% in fiscal 2025 to 78% by 2029. It also lifted India’s transfer and convertibility assessment to ‘A-’, highlighting improved external strength and a lower risk of payment restrictions.
Following the announcement, the Indian rupee rose to 87.58 against the U.S. dollar, while yields on 10-year government bonds fell seven basis points to 6.38%, signaling heightened investor confidence.
The Ministry of Finance welcomed the upgrade, reaffirming its commitment to structural reforms and its vision for India to achieve developed-economy status by 2047.
Market strategists described the decision as “a powerful signal to global debt markets,” expecting it to bolster foreign investment inflows and improve demand for long-term sovereign paper.
The Stable Outlook reflects S&P’s expectation that India will maintain fiscal discipline and solid growth over the next two years.
However, the agency warned that slippage in deficit reduction or a structural slowdown could put downward pressure on the rating, while continued fiscal improvement could pave the way for further upgrades.
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