Japan Credit Rating Agency (JCR) on Wednesday upgraded India’s sovereign ratings from ‘BBB+’ to ‘A-‘, with a Stable Outlook, the first by an international rating agency after a gap of over 35 years.

The rating of ‘A’ refers to a high level of certainty to honour financial obligations. BBB refers to the lowest investment grade. Other global rating agencies have their rating in BBB category including BBB- by Fitch, while S&P at BBB.

JCRA cited strong economic growth, improved fiscal management, robust financial-sector fundamentals, and effective structural reforms that have strengthened India’s economic resilience.

“The Indian economy has maintained a high growth rate of around 7%, supported by robust private consumption and public investment,” JCR said in a statement, giving the rationale for the upgrade.

“The government of India has steadily implemented policies conducive to productivity growth and economic development, including the development of digital public infrastructure and the implementation of the goods and services tax (GST), strengthening the country’s economic foundations as compared to the past.”

Meanwhile, the banking sector’s nonperforming loan ratio has declined to below 2%, helped by the establishment of the Insolvency and Bankruptcy Code and the Reserve Bank of India’s (RBI) strengthened financial supervision and macroprudential policies, it said.

“The ‘A’ is back after 35+ years. JCR has upgraded India to ‘A-’. Recognition of India’s growth momentum, macro stability, deep structural reforms, and the strength of Centre-State partnership,” said N. K. Singh, Chairman, 15th Finance Commission of India.

The last ‘A’ was Moody’s A2 rating given in 1988, which India lost in the 1990-91 Balance of Payment crisis, Singh said.

JCR said the financial foundation of the non-banking financial sector has also strengthened, contributing to a significant improvement in the soundness of the financial system in recent years.

“Considering India’s solid economic growth, the effectiveness of economic policies that strengthen the foundations for growth, and the improved soundness of the financial system, JCR has upgraded the Republic of India’s Foreign Currency and Local Currency Long-term Issuer Ratings by one notch to A-,” JCR said. It has also raised the country ceiling by one notch to “A.”

India has a population of more than 1.4 billion and nominal GDP of USD 3.9 trillion. “In FY2026, private consumption remained robust, supported by personal income tax cuts and reductions in GST rates, with the economy growing 7.7% in real GDP terms,” it said.

JCR said India faces structural challenges that keep fiscal deficits relatively high, mainly due to complex Centre-state financial relations, transfers to reduce disparities among states, and the impact of electoral cycles on fiscal management. However, in recent years, the government has controlled current spending, including subsidies, while increasing its focus on capital expenditure, especially infrastructure investment. This shift has improved the quality of government spending and is expected to support India’s long-term growth, it added.