India remains an attractive destination for investors despite global economic shocks, according to Yann Le Pallec, President of S&P Global Ratings. Speaking recently, Le Pallec emphasized India's strong economic fundamentals and growth prospects, reinforcing confidence in the nation's resilience.
S&P Global Ratings expects India's GDP to grow at an annual rate of 6.8 percent over the next three years. This robust growth forecast underscores India's potential to become the third-largest economy in the world by fiscal year 2030-31, with its nominal GDP nearly doubling to over US$7 trillion. Such expansion would elevate India's share in global GDP from 3.6% to 4.5% and lift its per-capita income to the upper-middle-income group.
Several factors contribute to this positive outlook. Domestic consumption drives a significant portion of India's growth, providing a buffer against external pressures. The continuation of structural reforms aimed at easing business transactions and enhancing the logistics sector are also vital in boosting private sector investment, which will make growth less dependent on public capital expenditure. Impressively, the HSBC India Purchasing Managers' Index (PMI), compiled by S&P Global Market Intelligence, has consistently indicated the highest private sector output expansion worldwide over the past year.
Le Pallec's positive assessment comes at a time when the Indian market is displaying strong investor confidence. The appetite for IPOs in the Food and Beverage sector, for instance, highlights this confidence in India's consumption story. These companies provide investors with exposure to businesses that combine recurring demand with improving margins and formalized distribution.
S&P Global's analysis also takes into account potential headwinds. While tariffs imposed by the U.S. may pose a one-off hit to growth, the overall impact is expected to be marginal and will not derail India's long-term growth prospects. Moreover, the agency acknowledges the importance of continued policy stability and high infrastructure investment in supporting India's growth trajectory. Cautious fiscal and monetary policies are also expected to moderate the government's debt and interest burden.
S&P Global upgraded India's long-term unsolicited sovereign credit rating to "BBB" from "BBB-" with a stable outlook. This upgrade reflects India's stronger economic fundamentals and its ability to maintain fiscal consolidation. The stable outlook indicates continued policy stability and high infrastructure investment, which are set to boost India's long-term growth.
Furthermore, the Indian government's commitment to economic reforms and raising living standards has played a crucial role in maintaining the country's growth momentum. The government welcomed S&P's decision to upgrade ratings. India's inclusion in global bond indexes is also expected to attract sizable foreign inflows into government debt.
While India's manufacturing growth showed some moderation in September 2025, business optimism remains high, fueled by tax relief from recent Goods and Services Tax (GST) rate changes and expectations of favorable demand. The S&P Global Ratings' assessment reinforces India's position as a bright spot in the global economy, offering investors a compelling combination of growth potential and resilience.
