Japan’s R&I lifts India’s sovereign rating to BBB+, third upgrade in 2025

Japanese credit rating agency Rating and Investment Information, Inc. (R&I) has upgraded India’s long-term foreign currency issuer rating to BBB+ from BBB, with a ‘stable’ outlook, citing resilient economic growth, progress on fiscal consolidation and improved external stability.

This is the third such upgrade of India by a sovereign credit rating agency this year, following S&P's upgrade to 'BBB' (from BBB-) in August 2025 and Morningstar DBRS' upgrade to 'BBB' (from BBB (low)) in May 2025.

R&I said India’s large-scale economy, driven by robust domestic demand and supported by Prime Minister Narendra Modi’s policies, is expected to sustain firm growth despite global headwinds.

The agency noted that risks to the financial system remain limited and government debt levels, while high, are manageable.

R&I in its report recognises the progress in fiscal consolidation by the government, driven by buoyant tax revenues and rationalisation of subsidies, and a manageable level of debt, along with high growth.

While the US recently raised tariffs on Indian imports to 50%, R&I said the impact would likely be contained as India’s growth is largely driven by domestic consumption and investment.

A scheduled cut in the goods and services tax rate from September is also expected to support household spending.

It also highlighted India's strengthened external stability, reflected in modest current account deficit, stable surpluses in services and remittances, low external debt-to-GDP ratio, and sufficient forex cover.

The current account deficit stood at less than 1% of GDP in FY2024, cushioned by surpluses in services and remittances. India’s foreign exchange reserves remain sufficient to cover imports and short-term external debt, the agency added.

The finance ministry welcomed the rating upgrade, and said the government remains committed to building on this momentum through policies that promote inclusive, high-quality growth alongside fiscal prudence and macroeconomic stability.

The upgrade reflects the “increasing global recognition for India’s robust and resilient macroeconomic fundamentals and prudent fiscal management,” the ministry said in a statement.