S&P’s India credit upgrade to lower cost of borrowings, boost inflows

The ratings upgrade will be a positive for foreign flows into India, and lead to a stable currency atmosphere say experts
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The much awaited S&P upgrade of India’s long-term sovereign credit rating will boost global investors confidence and puts India on par with Indonesia and Mexico among key emerging markets.

S&P has also mentioned that the country could see further rating upgrades if the net change in general government debt/GDP falls below 6 per cent.

A sovereign upgrade acts as an endorsement of the country’s policy credibility and macroeconomic stability. It sends a public signal that India’s ability to meet its debt obligations has improved, stated a Emkay Research report.

Beyond the near-term euphoria, the move will lead to lower cost of borrowings and trigger positive externalities, it said.

Deshnee Naidoo, CEO, Vedanta Resources said S&P Global’s upgrade of India’s sovereign rating is a vote of confidence on the economy which hinges on strong fundamentals with high growth, low inflation and prudent fiscal management.

“There is also an ongoing process of robust structural reforms. All of this only reinforces India’s attractiveness as a most promising long term investment destination,” she added.

Anish Shah, Group CEO and MD, Mahindra Group said that the rating upgrade is a strong vote of confidence on India’s robust economic fundamentals, disciplined fiscal consolidation and sustained reform momentum.

This will further boost global investor confidence, attract fresh capital and accelerate the nation’s transformation, he said.

Sharad Mahendra, Joint MD & CEO, JSW Energy said the development comes at an important juncture when the country is undergoing a historic energy transition, balancing the twin imperatives of growth and decarbonisation.

Increased capital flows and improved credit perception will accelerate investments in renewable energy, storage and emerging clean technologies, while supporting the expansion of resilient transmission infrastructure, he added.

A stronger sovereign credit profile also translates into improved financing conditions, enabling JSW Energy to deliver large-scale, sustainable and transformative projects with greater efficiency and speed, he said.

Madan Sabnavis, Chief Economist, Bank of Baroda on the S&P Rating said just when there is this ado on the tariff issue with India being slapped a higher tariff rate of 50 per cent, the upgrade is a strong message sent to all countries on the inherent strength of the Indian economy.

A lot of credit goes to the government and regulators for ensuring that fiscal policy and monetary policy have ensured a large quantum of discipline and stability in the economy, he said.

Indranil Pan, Chief Economist, YES Bank said the sustained fiscal discipline of India comes when most Developed Economies have relied on fiscal push to generate the growth impulse in their economies.

The ratings upgrade will be a positive for foreign flows into India, and lead to a stable currency atmosphere, thereby adding to the belief of lower financial market risks for India, said Pan.

Published on August 15, 2025

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