Has India Inc.'s credit ratio surged to 2.56 times in H1FY26?
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Synopsis
In a remarkable development, the credit ratio for India Inc. has risen to 2.56 times in H1FY26. This article delves into the implications of this growth, highlighting sectors benefiting the most and addressing the challenges posed by external economic conditions. Discover how domestic demand and infrastructure initiatives are shaping the future of Indian businesses.
Key Takeaways
- Credit ratio of India Inc. increased to 2.56 times in H1FY26.
- Upgrades rose to 15 percent, with 282 firms upgraded.
- Infrastructure sector credit ratio surged to 8.54 times.
- Challenges persist due to US tariffs affecting trade.
- Domestic demand remains strong, providing resilience.
New Delhi, Sep 30 (NationPress) The credit ratio for India Inc. has increased to 2.56 times during the first half of this fiscal year (H1FY26), a rise from 2.35 times in the latter half of the previous financial year. This growth reflects a robust and widespread resilience across various sectors.
According to Care Edge Ratings, upgrades improved to 15 percent from 14 percent recorded in H2FY25, while downgrades remained consistent at 6 percent.
The rating agency elevated ratings for 282 firms, with 110 firms experiencing downgrades.
Reaffirmations have remained stable at 80 percent over the past three years, indicating that most ratings have maintained their strength despite a fluctuating external environment, as outlined in the report.
Consistent domestic demand coupled with the government’s infrastructure initiatives has supported the upgrade momentum, with nearly 40 percent of all upgrades associated with infrastructure.
However, small-sized auto ancillaries, chemical manufacturers, small finance banks (SFBs), and non-banking financial companies (NBFCs) linked to microfinance and unsecured business loans have faced the highest downgrades due to pricing pressures and asset-quality issues.
“While India Inc. has shown improvement in H1FY26, the external environment is becoming increasingly complex. The rise in US tariffs is altering trade flows and supply chains, presenting challenges for Indian companies and delaying private sector capex until there is more clarity on demand,” stated Sachin Gupta, Executive Director and Chief Rating Officer at CareEdge Ratings.
Sectors reliant on exports may encounter margin pressures in the near future, despite resilient balance sheets and steady domestic demand providing some cushion against impacts.
The report also noted that merchandise exports to the US constitute a mere 2 percent of India’s GDP, with smartphones and generic pharmaceuticals currently exempt from tariffs, offering a buffer against immediate large-scale disruptions.
Amid these challenges, India’s infrastructure narrative remains strong, bolstered by policy support and consistent investment momentum. The credit ratio within the infrastructure sector surged to 8.54 times in H1FY26, with the Transport Infrastructure and Power sectors leading the upgrades.
Point of View
I believe that the latest trends in India's credit ratios affirm the resilience of our economy. While we celebrate the growth in infrastructure and domestic demand, we must remain vigilant about external pressures that could impact our progress. Our commitment to transparency and trust in reporting allows us to navigate these complexities with our audience.
NationPress
30/09/2025
Frequently Asked Questions
What is the current credit ratio of India Inc.?
The credit ratio of India Inc. has risen to 2.56 times in the first half of FY26.
How does the current credit ratio compare to the previous year?
The credit ratio increased from 2.35 times in the second half of the previous financial year.
What sectors are seeing the most upgrades?
The infrastructure sector has seen significant upgrades, with transport and power leading the charge.
What challenges does India Inc. face despite the growth?
The rise in US tariffs poses challenges to trade flows and may impact private sector investments.
How stable have ratings been over the past few years?
Reaffirmations have remained stable at 80 percent, indicating strong ratings despite external changes.
