ALSO READRupee hits all-time low of 88.75 against US dollar amid H-1B visa fee hike, foreign fund outflows
India’s GDP grew at 7.8 per cent in the April-June quarter.
Domestic factors
“We forecast India’s GDP growth to hold steady at 6.5 per cent this fiscal year (year ending March 31, 2026). We expect domestic demand to remain strong, supported by a largely benign monsoon season, cuts in the income and the goods and services tax, and accelerating government investment,” S&P said in a statement.
ALSO READIndia’s private sector growth strong in September, but off multi-year highs recorded in August
S&P said a sharper-than-expected decrease in food inflation will help keep inflation low in the current year.
“This leaves room for further monetary policy adjustments, and we anticipate a 25 bps rate cut by the Reserve Bank of India this fiscal year,” S&P added.
Effect of US tariffs
In its Economic Outlook Asia-Pacific Q4 2025: Growth To Ease On External Strain report, S&P said that across the region, relatively resilient domestic demand should dampen the impact from stronger external headwinds following the increase in US import tariffs and slower global growth.
US tariffs on imports from different Asian economies will shape both their export outlook and their role in regional supply chains.
“Relative to our June assumptions on US tariffs, China has so far fared somewhat better than other Asian economies, and Southeast Asian emerging markets somewhat worse. India has been hit much harder than expected,” S&P said.