According to an S&P Global Ratings report released on Thursday, India’s GDP is projected to grow by 6.7% in fiscal year 2025 (ending March), making it the fastest-growing economy in the Asia-Pacific region.
The report highlighted that India’s limited exposure to the U.S. reduces trade tariff risks, while strong domestic focus and robust economic fundamentals enhance the resilience of Indian businesses.
“Most of our rated Indian firms can withstand temporary earnings slowdowns. Improvements in operating and financial strength over the last few years provide additional cushion to absorb such pressures. Firms in India also benefit from a growing economy, supported by strong infrastructure development and consumer spending,” the report emphasized.
Additionally, the report stated that Indian companies benefit from a solid growth trajectory and enhanced credit quality, with most opting for onshore funding due to improved access to deepening liquidity in domestic markets.
Among sectors with significant exposure to the U.S. market, IT services, chemicals, and the automobile industry were highlighted. While services remain unaffected by tariffs, the auto sector could be impacted, particularly firms like Tata Motors Ltd., which has substantial exposure through Jaguar Land Rover Automotive PLC (JLR).
The report also noted India’s ambitious plan to expand renewable energy capacity to 500 gigawatts (GW) by 2032, up from the current 200 GW.
“There is also significant investment in the transmission sector. Power Grid Corporation of India Ltd. could double its capital expenditure to more than INR 300 billion per annum over the next few years,” the report stated.
S&P Global Ratings expects the median revenue and EBITDA growth of its rated firms to reach nearly 8% in fiscal year 2025, marking the fifth consecutive year of such expansion. Sectors such as steel, chemicals, and airports are anticipated to see above-average EBITDA growth.
For steel producers, a moderate decline in input prices and a substantial increase in volumes following recent capacity expansions will likely contribute to growth, although product prices are expected to remain stable. This projection assumes no significant impact on steel prices due to trade diversions resulting from U.S. tariffs.
The chemicals sector is predicted to continue its recovery from the downturn experienced in 2024, according to the report.
“We expect Indian firms to predominantly fund onshore this year due to the lower cost of domestic markets. Offshore funding channels, including dollar bonds, remain an option, but companies will likely use these selectively,” the report stated. It added that years of credit improvements and strong economic growth further reinforce the resilience of rated firms.
