India has received its third sovereign credit rating upgrade in 2025, with Japan’s Rating and Investment Information, Inc. (R&I) raising the country’s long-term rating from ‘BBB’ to ‘BBB+’ with a Stable Outlook. The decision underscores growing international confidence in India’s resilient, demand-driven economy and its disciplined approach to fiscal management, according to the Government of India’s announcement on Thursday.

R&I highlighted several factors behind the upgrade, including robust domestic demand, healthy tax revenues, and a narrowing fiscal deficit, which is expected to fall to 4.4% of GDP in FY26 from 4.8% in FY25. The agency also cited India’s low external debt, strong foreign exchange reserves, stable remittances, and steady service exports as key strengths. Importantly, non-performing assets in commercial banks have fallen to multi-decade lows, easing systemic risks and boosting financial sector stability.

The upgrade enhances India’s global borrowing profile, enabling more predictable and affordable access to international capital. It also positions India above the lowest investment grade across three major rating agencies, further strengthening investor confidence. R&I has projected India’s GDP growth to sustain in the mid-6% range through FY26 and beyond, supported by structural reforms and a vibrant domestic market.

The finance ministry hailed the move as clear validation of India’s macroeconomic stability, while economists see the consecutive upgrades as a strong global endorsement of India’s economic strategy amid uncertain global conditions.