India’s GDP Growth Rate Falls to 6.4%

Fitch has revised its 2025 GDP forecast for India from 6.6% to 6.4%, a decrease of 10 basis points. This is the most recent global economic news. While this may not seem like a major drop, it’s part of a broader trend reflecting global uncertainty. From escalating trade wars to sluggish performances in major economies like the US, China, and the EU, India finds itself navigating through some choppy international waters.

Let’s dive into what this means, why it matters, and how it could shape India's economic outlook by 2025.

Fitch Cuts India's GDP to 6.4%

In its April update, Fitch cuts India's GDP forecast to 6.4%, down from its previous estimate of 6.5%. The downgrade came as part of a global review impacted by rising trade tensions, especially between the US and its key trading partners. This subtle but symbolic revision points to concerns about slowing global demand, protectionist policies, and tighter financial conditions.

Why Is This Important?

• India has been a bright spot in a gloomy global growth landscape.

• A lower forecast may hint at challenges in maintaining strong momentum.

• Investors and policymakers closely watch these projections for planning and decisions.

India GDP Forecast 2025

Despite Fitch’s downgrade, other forecasts still reflect a relatively stable picture. The Economic Survey predicts a growth range of 6.3-6.8% for FY26, while the official forecast for FY25 is 6.5%. Nevertheless, there are a few stumbling blocks.

Q2 & Q3 FY24 Recap:

• GDP slowed to 5.4% in Q2 FY24.

• Rebounded to 6.2% in Q3 FY24.

This volatility underscores the impact of both global and domestic headwinds.

The Moody’s Angle: More Downgrades

Joining Fitch, Moody’s India growth projection also took a downward turn recently. Moody’s revised its forecast for calendar year 2025 from 6.6% to a lower range of 5.5% to 6.5%.

But why?

Key Reasons:

• Fresh US tariffs are disrupting global trade and could affect India's exports and economy.

• Lower export demand and weakened investor sentiment across Asia-Pacific.

• Specific hits to Indian exports — especially gems & jewellery, textiles, and medical devices.

Fitch thus reduced India's rating. Following Moody's and Fitch's downgrades of India's GDP and growth predictions, respectively, a lot more caution has seeped into the economic story. But Moody's projection of India's GDP lends even more caution to the economic narrative.

Global Trade War 2025: A Domino Effect?

The scenario of a worldwide trade war in 2025 is developing at a quicker rate than anticipated. The escalation between the US and China is spilling over, triggering protectionist policies and retaliatory tariffs. The effects are being felt across:

• South-East Asia

• Eurozone

• And yes, India too

With China economic slowdown 2025 expected to keep growth below 4%, and Eurozone growth barely scraping past 1%, India’s relatively higher growth looks strong — but it doesn’t make us immune.

India Export Sectors Affected

The trade war and the slowing global economy have a direct impact on India's export sectors. Here's where the pressure is building:

Most Affected Sectors:

• Textiles: Higher US tariffs hurt competitiveness.

• Gems & Jewellery: A luxury hit as global demand slumps.

• Pharma and Medical Devices: Regulatory barriers and price pressures.

• Auto Components: Supply chain disruptions and weak demand.

This is a crucial part of why Fitch cuts India's GDP—the assumption that export growth will underperform expectations in 2025.

India GDP Downgrade Reasons: Beyond Just Trade Wars

Let’s break down some other reasons behind the India GDP downgrade:

1. Inflation Concerns: Sticky food prices and imported inflation.

2. Geopolitical Tensions: Red Sea disruptions, Russia-Ukraine war still lingering.

3. Investment Slowdown: Lower global business confidence.

4. El Niño and Weather Volatility: Threats to agriculture and rural demand.

Each of these makes economic projections more uncertain — justifying the cautious tone in India GDP forecast 2025 by both Fitch and Moody’s.

Domestic Factors: What's Going Right?

Despite global noise, India still has solid fundamentals:

• Strong domestic consumption in urban areas.

• Digital infrastructure is rapidly expanding.

• Capex push by the government remains steady.

• The PLI scheme continues to attract investment.

These factors are keeping India’s growth ahead of many peers. So even though Fitch cuts India's GDP, the fundamentals remain encouraging, provided we play our cards right.

Policy Response: What Can Be Done?

With these downgrades in the air, the focus shifts to what can be done.

Government:

• Stimulate rural demand with more support schemes.

• Expand PLI and MSME access to global markets.

RBI:

• Maintain a balance between inflation control and growth support.

• Support liquidity and consumer lending.

These are steps that can boost confidence and counter the impact of global shocks.

The US Story: Why It Matters

According to Fitch, the US economy is expected to grow only 1.2% in 2025, with Q4 growth crawling at just 0.4% year-on-year. That’s significant for India because:

• The US is a major export destination.

• Any slowdown affects remittances from the Indian diaspora.

• Foreign investment and startup capital also depend on US investor confidence.

So yes, the impact of the US trade war on India is real and growing.

Looking Ahead: Can India Beat the Downgrade?

While Fitch cuts India's GDP, the downgrade is still minor. Here's the silver lining:

• India’s GDP growth rate is still expected to be among the highest globally.

• Private sector investments are expected to recover in H2 2025.

• Global companies are increasingly adopting a China+1 strategy, which may benefit India.

If India continues the reform momentum, enhances ease of doing business, and maintains export competitiveness, we can very well beat these forecasts.

Key Takeaways

Let’s wrap up with a quick snapshot of what we’ve covered:

• Fitch cuts India's GDP to 6.4% amid trade tensions

• Moody’s India growth projection revised to 5.5–6.5%

• India's GDP forecast for 2025 shows a moderate outlook

Important export industries, such as the textile and gem trades, are impacted.

The global trade war 2025 is reducing investment and demand
Despite everything, India remains a resilient growth story

Final Thoughts

When you see a headline that says, "Fitch cuts India's GDP," it’s easy to assume doom and gloom. But take a closer look, and you’ll see a country that's weathering global storms with remarkable composure. Yes, risks exist. But so do opportunities — especially if India leverages its demographic edge, pushes reforms, and remains a steady voice in a noisy world.

So while downgrades are worth noting, they’re not the full story. And if there’s one thing recent years have shown us, it's that India often ends up outperforming expectations.