Overview

• ICRA logged 214 upgrades versus 75 downgrades in H1 FY2026, delivering a Credit Ratio of 2.9x driven by stronger fundamentals and lower project risks in sectors such as power and roads.
• Defaults stayed scant at 0.2% in H1, with six cases in total and only one investment‑grade default involving an MSME‑focused NBFC facing liquidity stress after covenant breaches.
• Corporate leverage continued a multi‑year decline as Total Debt to OPBDITA fell to 2.1x from 3.4x since 2016, while cash and current investments rose to 46% of total debt.
• ICRA cites GST rate rationalisation, income‑tax relief, transmission of rate cuts and easing food inflation as supports for consumption, and it projects bank credit growth of 10.4–11.3% and NBFC growth of 15–17% this year.
• A sustained 50% US duty threatens export‑reliant segments such as cut and polished diamonds, textiles and seafood, with the US taking about 20% of India’s exports and 50–60% of those flows now vulnerable, risking a 4–5% YoY merchandise export decline if tariffs persist and with services protectionism like the HIRE Act flagged as a key risk.