S&P Global Ratings cuts India's FY26 growth rate by 20 basis points to 6.3%

S&P cites US tariff shocks and rising global uncertainty as reasons for trimming India's FY26 growth projection to 6.3 per cent and FY27 estimate to 6.5 per cent

S&P Global Ratings on Friday cut India’s growth projection by 20 basis points to 6.3 per cent for the current financial year (FY26), citing a “seismic and uncertain shift” in US trade policy that has roiled markets and raised the spectre of a global economic slowdown.

 

“The jump in US import tariffs, trading partner retaliation, ongoing concessions, and subsequent market turbulence constitute a shock to the system centred on confidence and market prices,” S&P Global Ratings noted in its latest economic update.

 

In addition, the agency lowered India’s growth forecast for FY27 by 30 basis points to 6.5 per cent.

 

 

This marks the second consecutive cut made by the global credit rating agency for India’s FY26 growth estimate, after having trimmed its forecast by 20 basis points to 6.5 per cent on 25 March.

 

“The risks to our baseline remain firmly on the downside in the form of a stronger-than-anticipated spillover from the tariff shock to the real economy. The longer-term configuration of the global economy, including the role of the US, is also less certain,” S&P Global Ratings added.

 

Earlier last month, the Reserve Bank of India (RBI) also lowered India’s FY26 growth forecast by 20 basis points to 6.5 per cent, citing uncertainties in global trade and policy dynamics.

 

S&P further noted that global growth is projected to be 30 basis points lower in calendar years 2025 and 2026 relative to the previous forecast round, with all regions expected to be negatively affected.

 

Regarding China, the agency stated that assuming the tariffs remain in place, China’s GDP will slow to 3.5 per cent in 2025 and 3 per cent in 2026, down from the earlier projections of 4.1 per cent and 3.8 per cent respectively.

 

“In response to US tariffs of more than 100 per cent, we expect a sharp decline in China’s exports to the US. With exports to other countries also affected amid declining real world trade growth, we now expect overall export declines in China of more than 5 per cent in 2025 and more than 6 per cent in 2026. We revise China’s domestic demand growth down only moderately, as we anticipate policy support will offset a sizable portion of the spillover impact from the export plunge on investment and consumption,” the agency said.