Indian corporates have demonstrated remarkable resilience in their credit profiles despite global uncertainties such as tariff disruptions and geopolitical tensions, according to a report by ICRA Ratings released on Tuesday.
The report noted that India’s domestic-focused economy helps cushion the impact of higher US tariffs. “Domestic consumption is likely to receive a boost from GST rate rationalisation, income tax relief, rate cuts, and easing food inflation, particularly supporting urban demand, which has seen uneven recovery,” ICRA stated.
The steep 50 per cent tariff imposed by the US on Indian exports poses challenges, especially for cut and polished diamonds, textiles, and seafood sectors, which heavily rely on the US market. “However, positive domestic trends have led us to revise the FY2026 GDP growth forecast upward by 50 basis points to 6.5 per cent, helping offset the tariff impact,” said K. Ravichandran, Executive Vice President and Chief Rating Officer, ICRA.
ICRA’s report highlighted that during the first half of FY2026, ratings of 214 entities were upgraded, while 75 were downgraded, resulting in a robust Credit Ratio of 2.9 times. Upgrades were driven by improvements in business fundamentals, stronger parent credit profiles, reduced project risks, market share expansion, and favourable shifts in product mix and cost structures.
The report also cautioned that potential protectionist measures, such as the proposed HIRE Act affecting services exports, could disrupt India’s outsourcing industry due to its reliance on the US market. Merchandise exports to the US, which account for nearly 20 per cent of total exports, could contract 4–5 per cent YoY in FY2026 if the higher tariffs persist.
“Despite these external headwinds, the impact on India’s overall economy is expected to remain limited, as US exports account for only 2 per cent of GDP. Domestic private consumption, which contributes 57 per cent to GDP, is likely to be supported by GST rationalisation and improved affordability,” Ravichandran added.
-IANS