Mumbai, April 1 -- Rating agencies remain largely confident in the credit quality of Indian companies so far, but have grown cautious about potential financial stress if the West Asia war drags on.

The second half of FY26 (October-March) saw some easing in tariff-related risks. The India-EU trade deal combined with GST rate cuts, income tax relief, easing inflation and transmission of policy rate cuts improved the credit outlook for Indian companies, they said.

"These developments had strengthened the outlook for Indian corporates entering 2026-27. However, the escalation of hostilities in West Asia since late February 2026 has reintroduced risks, particularly for India's energy and food security," said K. Ravichandran, executive vice-p...