CRISIL Ratings has assessed that the reciprocal tariffs imposed by the United States are expected to have a minimal impact on the credit quality of Indian companies. According to the rating agency, less than 0.25% of the 7,200 companies it rates—primarily in manufacturing sub-sectors such as diamond polishing, textiles, pharmaceuticals, chemicals, shrimp, automotive components, and electrical and industrial machinery—are potentially at risk.
These companies, which derive at least 25% of their revenue from the US market, possess adequate balance-sheet strength, mitigating significant credit weakening. CRISIL noted that the median gearing for these firms remains below 0.5 times, and the median interest coverage ratio exceeds 5 times, indicating robust financial health.
The infrastructure and financial sectors, comprising 17% of the rated pool, are largely domestically focused and thus not directly impacted by the tariffs. Similarly, the services sector, accounting for 18% of the rated entities, has not been affected as no US tariffs have been announced for this segment.
CRISIL’s impact assessment assumes that the reciprocal tariffs will be implemented after the current 90-day pause. However, the evaluation does not consider potential second-order effects such as market distortions, supply diversions to domestic markets, or a significant global economic slowdown resulting from the tariffs, as these outcomes remain uncertain.
Source (full link):
https://economictimes.indiatimes.com/news/company/corporate-trends/us-tariffs-pose-minimal-risk-to-india-incs-credit-quality-crisil/articleshow/120410849.cms
Disclaimer: This article is not authored or drafted by any employee of FinMen Advisors. The information presented is entirely sourced from the above news link. FinMen Advisors is not responsible for the accuracy, completeness, or reliability of the information.
