India will continue to be Asia’s fastest-growing major economy in 2026 with a projected GDP expansion of 6.4%, Fitch Ratings said, placing the country ahead of regional peers such as Indonesia, the Philippines and Malaysia. The agency cited strong domestic demand, infrastructure spending and a resilient services sector as key growth drivers.
Fitch noted that India’s relatively lower dependence on manufacturing exports makes it less vulnerable to near-term disruptions in global trade compared with more export-oriented Asian economies. This structural feature is expected to cushion the impact of external shocks, including potential tariff measures and shifting trade patterns.
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Trade diversification strategy
The report highlighted India’s recent efforts to broaden trade partnerships beyond the United States, including agreements with the US and the European Union, as part of a strategy to reduce external risks. While the full implications of US tariff policies remain uncertain, diversified trade linkages are expected to provide a buffer over time.
RBI likely to maintain status quo
On the monetary front, Fitch expects the Reserve Bank of India to keep the policy rate unchanged at 5.25% in the near term following the rate cut in December. Stable inflation and steady growth momentum, the agency said, give the central bank room to pause further policy moves.
Fiscal outlook improving
Fitch pointed to enhanced fiscal transparency in recent budgets, including broader expenditure disclosures and buoyant tax revenues driven by economic growth and GST collections. These factors improve the prospects for a gradual reduction in the government’s debt-to-GDP ratio over the medium term.
However, the agency cautioned that public debt will remain relatively high, making sustained fiscal consolidation essential for long-term macroeconomic stability.
Domestic engines support growth
India’s consumption-led growth model, rising public capital expenditure, digitalisation and expansion of the services sector continue to underpin economic momentum. These structural strengths differentiate India from export-heavy Asian economies that are more sensitive to global demand cycles.
Regional context
While other Asian economies are also expected to post steady growth, Fitch said their higher reliance on external trade makes them more exposed to global volatility. India’s stronger domestic orientation provides a comparative advantage in an uncertain global environment.
The agency’s assessment reinforces India’s position as a key growth engine in Asia, though it emphasised that maintaining fiscal discipline and managing debt levels will be crucial to sustaining the current trajectory over the medium term.
About the author – Rehan Khan is a law student and legal journalist with a keen interest in cybercrime, digital fraud, and emerging technology laws. He writes on the intersection of law, cybersecurity, and online safety, focusing on developments that impact individuals and institutions in India.
