Business
Trump sees a ‘dead economy’ – but US-based S&P Global upgrades India’s credit rating – here’s why – Times of India
S&P Global, the US-based credit ratings agency, has upgraded India’s rating to ‘BBB’ from ‘BBB-) citing several positive factors in favour of the world’s fifth largest economy. S&P’s confidence in India’s growth story comes at a time when US President Donald Trump has imposed a 50% tariff on Indian exports to America, and has even called India a ‘dead economy’. This is reportedly the first rating upgrade for India in almost 19 years.The credit rating of an economy reflects the country’s ability and willingness to repay debt. It is a crucial indicator of economic health, indicating the risk level for investors and lenders.
“The upgrade of India reflects its buoyant economic growth, against the backdrop of an enhanced monetary policy environment that anchors inflationary expectations. Together with the government’s commitment to fiscal consolidation and efforts to improve spending quality, we believe these factors have coalesced to benefit credit metrics,” S&P said.
Little impact of Trump’s tariffs on India
Not only has S&P upgraded India’s sovereign rating, it has also said that the impact of US tariffs is not likely to be extensive on India’s economy.“We believe the effect of US tariffs on the Indian economy will be manageable. India is relatively less reliant on trade and about 60% of its economic growth stems from domestic consumption,” S&P Global said.“We expect that in the event India has to switch from importing Russian crude oil, the fiscal cost, if fully borne by the government, will be modest given the narrow price differential between Russian crude and current international benchmarks,” it said.While the United States is India’s biggest trading ally, the potential imposition of 50% tariffs is not anticipated to significantly hinder economic growth. Exports from India to the US account for roughly 2% of the country’s GDP, S&P notes.Taking into account specific exemptions for sectors like pharmaceuticals and consumer electronics, the portion of Indian exports that would be affected by these tariffs decreases to 1.2% of GDP. Although this could lead to a temporary setback in growth, we predict that the overall effect will be minimal and will not disrupt India’s long-term economic trajectory, it added.Also Read | ’Secondary tariffs could go up…’: US official warns of higher sanctions on India if Trump’s talks with Putin fail; asks Europe to ‘put up or shut up’After Trump’s move to impose high tariffs on India, several global institutions and experts have predicted that India’s GDP growth may take an up to 0.3% hit due to US trade moves.
Major items US imports from India
Why did S&P upgrade India’s credit rating?
- India continues to be one of the top-performing economies globally. It has made a significant recovery from the pandemic, with real GDP growth from fiscal year 2022 (ending March 31) to fiscal year 2024 averaging 8.8%, the highest in the Asia-Pacific region.
- The Indian economy’s overall size is now believed to be approximately 80% bigger in rupee terms compared to its pre-COVID state, and nearly 50% larger when measured in dollars. However, the pace of economic growth is stabilizing towards a more sustainable rate, maintaining strong momentum.
- S&P anticipates that this growth trend will persist in the medium term, with GDP projected to rise by 6.8% annually over the next three years. This growth helps to moderate the government debt-to-GDP ratio, despite the presence of substantial fiscal deficits.
- The recent performance of India’s economy underscores its enduring strength. S&P’s forecasts for robust growth, despite external challenges, are based on the country’s positive structural developments. These include favorable demographics and competitive labor costs.
- India’s corporate and financial sectors have improved their balance sheets compared to the pre-pandemic period. Nonetheless, S&P acknowledges that maintaining high growth rates over an extended period is essential for the economy to generate enough jobs, lessen inequality, and fully capitalize on its demographic advantages.
- India’s fiscal weaknesses have historically been the most fragile aspect of its sovereign credit ratings. However, with the economy now on a solid recovery path, the government is able to outline a clearer, though gradual, strategy for fiscal consolidation. S&P forecasts suggest that the general government deficit, which is 7.3% of GDP in fiscal year 2026, will decrease to 6.6% by fiscal year 2029.
- Over the past five to six years, the quality of government expenditure has seen improvement, says S&P. The current government has increasingly prioritized infrastructure in its budget allocations. The union government’s capital expenditure is projected to rise to 11.2 trillion Indian rupees, or approximately 3.1% of GDP, by fiscal year 2026, up from 2% of GDP a decade ago.
- When including capital spending by state governments, total public investment in infrastructure is expected to be around 5.5% of GDP, which is comparable to or exceeds that of similar sovereign entities. S&P anticipate that enhancements in infrastructure and connectivity in India will eliminate bottlenecks that currently impede long-term economic growth.
- The shift in monetary policy towards inflation targeting has proven beneficial. Inflation expectations are now more stable compared to ten years ago. From 2008 to 2014, India frequently experienced inflation rates in the double digits. However, over the last three years, despite fluctuations in global energy prices and supply disruptions, the Consumer Price Index (CPI) has grown at an average rate of 5.5%. Recently, it has remained at the lower end of the Reserve Bank of India’s (RBI) target range of 2%-6%. These changes, along with a robust domestic capital market, indicate a more stable and conducive environment for monetary policy, says S&P.
- India’s sovereign ratings are supported by a vibrant and rapidly expanding economy, a strong external balance sheet, and democratic institutions that ensure policy consistency. These positive aspects are offset by the government’s poor fiscal performance, high debt levels, and low GDP per capita.
Indian Economy: The road ahead
“The Indian general elections resulted in a third consecutive term for Prime Minister Narendra Modi after his Bhartiya Janata Party (BJP) won the largest number of seats but fell short of an absolute majority. The subsequent formation of a coalition government is a first for the BJP, which has ruled independently in its previous two terms,”S&P said.“But the BJP retains a healthy majority in the Lok Sabha, India’s lower house of parliament. This supports the government’s efforts to implement economic reforms. Since the beginning of economic liberalization in 1991, India has had consistently high GDP growth while governed by different political parties and coalitions–reflecting a consensus on key economic policies,” it adds.Also Read | ‘Can’t cross some red lines’: Government officials tell Parliamentary Panel on India-US trade talks; focus on export diversification amidst Trump tariffs“In our view, the success of the government in funding large infrastructure investment without substantially widening the country’s current account deficit will be important. If India can shrink the fiscal deficit significantly while achieving these objectives, rating support will strengthen over time,” it says.According to S&P Global, its stable outlook indicates the belief that India’s long-term growth prospects will be bolstered by consistent policy stability and significant infrastructure investments. This, coupled with prudent fiscal and monetary policies that help manage the government’s high debt and interest obligations, will support the rating over the next two years.S&P said that it may upgrade the ratings if fiscal deficits significantly decrease, leading to a structural reduction in the net change of general government debt to below 6% of GDP. Sustained increases in public infrastructure investment would enhance economic growth, and when combined with fiscal reforms, could strengthen India’s weak public finances.However, S&P said it might consider lowering the ratings if it sees a decline in political commitment to improving public finances. Additionally, if India’s economic growth significantly slows down in a way that threatens fiscal sustainability, it could also exert downward pressure.
Business
Trade talks: India, EU wrap up 14th round of FTA negotiations; push on to seal deal by December – The Times of India
India and the 27-nation European Union (EU) have concluded the 14th round of negotiations for a proposed free trade agreement (FTA) in Brussels, as both sides look to resolve outstanding issues and move closer to signing the deal by the end of the year, PTI reported citing an official.The five-day round, which began on October 6, focused on narrowing gaps across key areas of trade in goods and services. Indian negotiators were later joined by Commerce Secretary Rajesh Agrawal in the final days to provide additional momentum to the talks.During his visit, Agrawal held discussions with Sabine Weyand, Director General for Trade at the European Commission, as both sides worked to accelerate progress on the long-pending trade pact.Commerce and Industry Minister Piyush Goyal recently said he was hopeful that the two sides would be able to sign the agreement soon. Goyal is also expected to travel to Brussels to meet his EU counterpart Maros Sefcovic for a high-level review of the progress made so far.Both India and the EU have set an ambitious target to conclude the negotiations by December, officials familiar with the matter said, PTI reported.Negotiations for a comprehensive trade pact between India and the EU were relaunched in June 2022 after a hiatus of more than eight years. The process had been suspended in 2013 due to significant differences over market access and tariff liberalisation.The EU has sought deeper tariff cuts in sectors such as automobiles and medical devices, alongside reductions in duties on products including wine, spirits, meat, and poultry. It has also pressed for a stronger intellectual property framework as part of the agreement.For India, the proposed pact holds potential to make key export categories such as ready-made garments, pharmaceuticals, steel, petroleum products, and electrical machinery more competitive in the European market.The India-EU trade pact talks span 23 policy chapters covering areas such as trade in goods and services, investment protection, sanitary and phytosanitary standards, technical barriers to trade, rules of origin, customs procedures, competition, trade defence, government procurement, dispute resolution, geographical indications, and sustainable development.India’s bilateral trade in goods with the EU stood at $136.53 billion in 2024–25, comprising exports worth $75.85 billion and imports valued at $60.68 billion — making the bloc India’s largest trading partner for goods.The EU accounts for nearly 17 per cent of India’s total exports, while India represents around 9 per cent of the bloc’s overall exports to global markets. Bilateral trade in services between the two partners was estimated at $51.45 billion in 2023.
Business
Telcos network costs rise: Gap between expenditure and revenue exceeds Rs 10,000 crore; COAI flags rising network investment burden – The Times of India
The gap between telecom operators’ network expenditure and revenue continues to widen, prompting industry body COAI to defend calls for higher mobile tariffs, citing the increasing financial burden of network deployment on service providers.Speaking at the India Mobile Congress, Cellular Operators Association of India (COAI) Director General, SP Kochhar, told PTI that while the government has provided significant support to telecom operators through policies such as the right of way (RoW), several authorities continue to levy exorbitant charges for laying network elements.“Earlier, the gap until 2024 for infrastructure development and revenue received from tariffs was around Rs 10,000 crore. Now it has started increasing even further. Our cost of rolling out networks should be reduced by a reduction in the price of spectrum, levies etc. The Centre has come out with a very good ROW policy. It is a different matter that many people have not yet fallen in line and are still charging extremely high,” Kochhar said.He also defended the recent cut in data packs for entry-level tariff plans by select operators, stressing that the move was necessary given competitive pressures.Kochhar pointed out that competition among the four telecom operators remains intense, and there has been no significant trend suggesting that consumers are shifting towards low-cost data options.“There is a need to find ways to make high network users pay more for the data. Seventy per cent of the traffic which flows on our networks is by 4 to 5 LTGs (large traffic generators like YouTube, Netflix, Facebook etc). They pay zero. Nobody will blame OTT but they will blame the network. Our demand to the government is that they [LTGs] should contribute to the development of networks,” Kochhar said.He added that the investments made by Indian telecom operators are intended for the benefit of domestic consumers and are not meant to serve as a medium for profit for international players who do not bear any cost.
NEW DELHI: Equity investments in India’s real estate sector jumped 48 per cent year-on-year to $3.8 billion in the July-September period (Q3), a report said on Friday. This growth in inflow was primarily fuelled by capital deployment into land or development sites and built-up office and retail assets, according to the report by real estate consulting firm CBRE South Asia.
In the first nine months of 2025, the equity investments increased by 14 per cent on-year to $10.2 billion — from $8.9 billion in the same period last year.
The report highlighted that land or development sites and built-up office and retail assets accounted for more than 90 per cent of the total capital inflows during Q3 2025.
On the category of investors, developers remained the primary drivers of capital deployment, contributing 45 per cent of the total equity inflows, followed by Institutional investors with a 33 per cent share.
CBRE reported that Mumbai attracted the highest investments at 32 per cent, followed by Pune at around 18 per cent and Bengaluru at nearly 16 per cent.
Anshuman Magazine, Chairman and CEO – India, South-East Asia, Middle East and Africa, CBRE, said that the healthy inflow of domestic capital demonstrates the sector’s resilience and depth.
“In the upcoming quarters, greenfield developments are likely to continue witnessing a robust momentum, with a healthy spread across residential, office, mixed-use, data centres, and I&L sectors,” he added.
In addition to global institutional investors, Indian sponsors accounted for a significant part of the total inflows.
“India’s ability to combine strong domestic capital with global institutional participation will remain a key differentiator in 2026 and beyond,” added Gaurav Kumar, Managing Director, Capital Markets and Land, CBRE India.
CBRE forecasts a strong finish for the investment activity in 2025, fuelled by capital deployment into built-up office and retail assets.
For the office sector, the limited availability of investible core assets for acquisition indicate that opportunistic bets are likely to continue gaining traction, the report noted.
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