Mumbai, April 1: US tariff orders are likely to moderate India Inc’s credit profiles in the second half of FY26, and the West Asia conflict, especially its duration, will play a crucial role in determining how it pans out in the future, rating agencies said on Wednesday.
Crisil Ratings, which rates over 7,300 entities, conducted a stress test on the likely impact of the West Asia crisis on Indian companies, which revealed that 23 of the 30 sectors with exposure to the Gulf region will be resilient to the pressure.
Its managing director Subodh Rai told reporters that it is very difficult to predict how long the war will last and what the final outcomes will be.
This is leading the agency to term the credit quality outlook as “stable” for now, on strong balance sheets and domestic demand.
“Corporate India’s agility and resilience are being tested again after the Covid-19 pandemic and the tariff tantrums. We remain cautious as the duration and intensity of the West Asia conflict are uncertain. If it prolongs, slower global growth, gas availability challenges, higher-for-longer crude oil prices, and consequently impact on consumer sentiment will bear watching,” its senior director Somasekhar Vemuri said.
The credit ratio, or the proportion of rating upgrades to downgrades, moderated to 1.50 per cent, with 383 upgrades to 255 downgrades in H2 FY26, Crisil said.
The agency had expected a higher ratio in October, but the US tariffs and their impact on the export-oriented sectors, especially textiles, led to the moderation. (PTI)
