Archive · 1 Oct 2026
India Inc Resilient Despite West Asia Conflict and Rate Hikes
Indian companies are facing several difficult problems, including war-related uncertainty, expensive energy and transportation, and a weak monsoon.
Even so, their financial health has generally improved.
A measure comparing credit upgrades with downgrades rose from 1.50 to 2.18.
Companies changed suppliers and delivery routes to handle disruptions.
Some businesses also charged customers more and kept their debt under control.
Three sectors remain especially exposed to the West Asia conflict: diamond polishing, specialty chemicals and polyester textiles.
Other sectors, including airlines, ceramics and flexible packaging, received more stable outlooks.
Banks may see a small rise in bad loans, but the agency said companies could largely manage a rate increase of up to 50 basis points.
India’s corporate credit ratio improved to 2.18 times in the first half of FY27 from 1.50 times in the second half of FY26.
Crisil Ratings said companies remained resilient despite geopolitical uncertainty, supply disruptions, higher costs and weak monsoon conditions.
Businesses responded by diversifying suppliers, changing logistics, passing some costs to customers and maintaining strong balance sheets.
Diamond polishers, specialty chemicals and polyester textiles remain exposed to the West Asia conflict, while airlines, ceramics and flexible packaging improved to a stable outlook.
Banks’ gross non-performing asset ratio could rise marginally to 1.9–2% by the end of the fiscal year, while a rate increase of up to 50 basis points appears manageable.
- Who
- India Inc, assessed by Crisil Ratings, along with Indian banks and affected business sectors.
- What
- Corporate credit quality improved despite geopolitical, supply-chain, cost and weather-related pressures.
- When
- In the first half of FY27, compared with the second half of FY26; projections also cover the end of the fiscal year.
- Where
- India, amid pressures linked to the West Asia conflict and global supply chains.
- Why
- Companies adapted through supplier diversification, logistics changes, partial cost pass-through and strong balance sheets.
- Credit ratio
- Improved to 2.18 times in the first half of FY27 from 1.50 times in the second half of FY26.
- Sectors still at risk
- Diamond polishers, specialty chemicals and polyester textiles.
- Sectors with stable outlooks
- Airlines, ceramics and flexible packaging.
- Bank gross NPA forecast
- Could rise to 1.9–2% by the end of the fiscal year, from 1.8% in the year-ago period.
- Rate-hike stress test
- A rate increase of up to 50 basis points was described as largely manageable.
- Key pressures
- West Asia conflict, supply-chain disruptions, higher energy and logistics costs, and weak monsoon conditions.