Japan Credit Rating Agency raises India’s long-term foreign and local currency issuer ratings by one notch, citing strong economic growth, improving fiscal quality, a healthier financial system and a resilient external position.
India has received a major boost to its sovereign credit profile, with the Japan Credit Rating Agency (JCR) upgrading the country’s long-term foreign currency and local currency issuer ratings by one notch to ‘A-’ from ‘BBB+’. JCR has maintained a stable outlook and also raised India’s country ceiling to ‘A’.
The upgrade, announced on September 2, reflects what JCR described as India’s solid and resilient economic growth, effective economic policies, improving fiscal quality, stronger financial-sector fundamentals and a robust external position.
According to the agency, India has continued to record a high growth rate, supported by strong private consumption and sustained public investment. The latest government estimates show that India’s real GDP grew 7.8 per cent in FY26, while growth remained at 7.8 per cent in the first quarter of FY27, despite a challenging global environment.
JCR also highlighted structural reforms and policy measures aimed at strengthening the foundations of India’s economy. It pointed to initiatives including digital public infrastructure and the implementation of the Goods and Services Tax (GST) as measures supporting productivity and long-term economic development.
Fiscal position improves
The rating agency also noted an improvement in the quality of government spending, with greater emphasis on capital expenditure and infrastructure investment.
India’s Central Government fiscal deficit declined to 4.4 per cent of GDP in FY26 from 4.7 per cent in FY25, while capital expenditure remained elevated, JCR said.
More from BusinessThe agency viewed the shift towards productive capital spending as a positive for India’s medium- to long-term growth prospects.
The banking system strengthens
JCR also cited a significant improvement in the soundness of India’s financial system.
The asset quality of the banking sector has strengthened, supported by measures including the Insolvency and Bankruptcy Code, government capital infusion and stronger supervision by the Reserve Bank of India (RBI).
The agency noted that banks have maintained sound levels of capital adequacy and profitability. It also pointed to improvements in asset quality and capital adequacy in the non-banking financial sector.
External position remains resilient
India’s external position was another key factor behind the upgrade.
JCR said the country’s current account deficit remains contained, supported by a surplus in the services balance. India’s foreign exchange reserves, which significantly exceed short-term external debt, provide an important buffer against external shocks, the agency noted.
The rating upgrade comes amid a challenging global economic environment and underscores JCR’s assessment that India’s underlying economic fundamentals have continued to strengthen.
India receives a series of sovereign rating upgrades
The JCR upgrade follows a series of rating actions by major agencies over the past year.
Morningstar DBRS upgraded India’s sovereign rating in May 2025, followed by S&P Global Ratings in August 2025 and Japan’s Rating and Investment Information (R&I) in September 2025.
The latest move by JCR further strengthens India’s standing in global sovereign credit markets and signals growing confidence in the country’s economic resilience, fiscal management and financial-sector stability.
