Fitch Ratings has revised downward its forecast for India's economic growth in FY27, projecting GDP expansion of 6.4%, lower than its previous estimate. The revision comes amid heightened geopolitical uncertainty following the escalating conflict involving the United States and Iran, which has increased concerns over global trade, energy prices, and economic stability.

In its June edition of the Global Economic Outlook, Fitch noted that India's economy is expected to moderate from the 7.4% growth recorded in FY26. The agency believes that rising inflationary pressures could weigh on household consumption by reducing purchasing power, even as public capital expenditure continues to support economic activity.

The rating agency highlighted that elevated crude oil prices resulting from geopolitical tensions could create additional inflationary risks for India, a major importer of energy. Higher energy costs could affect consumer spending, business margins, and the country's external balances if sustained over an extended period.

The revised forecast follows the Reserve Bank of India's recent decision to lower its own FY27 GDP growth projection to 6.6%. While domestic demand remains relatively resilient, policymakers and economists are closely monitoring global developments that could impact investment flows, trade activity, and inflation trends.

Despite the downgrade, India is expected to remain among the fastest-growing major economies globally. Fitch noted that ongoing infrastructure investments, government spending programs, and structural reforms continue to provide support to medium-term growth prospects. However, external risks linked to geopolitical developments and global economic uncertainty are likely to remain key challenges during FY27.

Market participants will closely watch inflation, crude oil prices, and policy responses from both the government and the RBI as the economic outlook evolves over the coming quarters.