Trade Deals, Budget Uphold India's Sovereign Credit Profile: CareEdge

A CareEdge Ratings report states India's sovereign credit profile (BBB+/Stable) is upheld by US/EU trade deals and the FY27 Budget's fiscal roadmap. These factors reduce uncertainty, boost export competitiveness, and support medium-term growth.

The recently announced trade deals with the United States and the European Union (EU), along with the fiscal policy roadmap outlined in the Union Budget 2026-27, uphold India's (CareEdge Global BBB+/Stable) sovereign credit profile, according to a report by CareEdge Ratings.

The report stated that India's sovereign credit profile continues to be supported by resilient growth prospects, improving external visibility, and a calibrated approach to fiscal consolidation. It noted that recent trade agreements have reduced external uncertainty and enhanced India's relative export competitiveness. It stated "Recent Trade Deals and Fiscal Consolidation in Budget Support India's Credit Fundamentals... uphold India's (CareEdge Global BBB+/Stable) credit profile".

Boost from Trade Agreements

The new India-US trade agreement is expected to lower US tariffs on imports from India to 18 per cent from the currently prevailing cumulative headline tariff of 50 per cent. The proposed tariff reduction could improve India's relative competitiveness of exports. Along with India's trade engagement with the EU, this is expected to enhance the diversification and scale of India's exports and support medium-term growth prospects.

Steady Fiscal Consolidation Path

The report also highlighted that the Union Budget 2026-27 signals a steady and calibrated approach to fiscal consolidation. The Budget remains anchored to maintaining the deficit target, with continued emphasis on public capital expenditure and investment-led expansion. According to the report, this approach reinforces medium-term growth and strengthens macroeconomic stability.

Macroeconomic Outlook and Debt

While India's public debt levels and interest burden remain elevated, the report noted that resilient domestic demand, diversified growth drivers, and comfortable external buffers are expected to support macroeconomic stability over the near to medium term.

Sustaining Growth and Fiscal Credibility

The report also expects that the combination of improved trade dynamics and a disciplined fiscal path will help cement India's growth trajectory.

The agency highlighted that sustained progress on revenue mobilisation, delivery on disinvestment targets, and effective debt management will be critical to maintaining fiscal credibility.

The report added that a sustained commitment to medium-term fiscal consolidation bodes well for the country's sovereign credit profile.

Overall, the developments on the trade front and the fiscal policy direction outlined in the FY27 Budget are seen as positive factors supporting India's (CareEdge Global BBB+/Stable) rating outlook. (ANI)

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