Fitch currently assumes a minimal direct tariff impact on Indian IT service companies and domestically focused sectors such as upstream and downstream oil and gas, cement and building materials, engineering and construction, telecoms, and utilities.
Fitch Ratings believes India-based corporates generally have low direct exposure to US tariffs, but sectors that are currently unaffected, including pharmaceuticals, could be hit by further US tariff announcements. The risk of second-order effects from existing tariffs is also rising. A US-India trade deal, if secured, would reduce these risks, Fitch says.
The US imposed 25 per cent “reciprocal” tariffs on India with effect from 7 August 2025 and an additional 25 per cent levy in connection with its oil imports from Russia, effective 27 August.
India’s direct automotive exports to the US, including parts, are limited. The US accounts for close to 20 per cent of sales for auto supplier Samvardhana Motherson International Limited (SAMIL, BB+/Stable), but mostly from production bases in the US, or those in Mexico that benefit from tariff exemptions under the United States-Mexico-Canada Agreement. Nonetheless, Fitch revised the Outlook on SAMIL to Stable from Positive in May 2025, reflecting our expectation that a weakened global auto sector outlook amid tariff-related uncertainty would limit further improvement in SAMIL’s financial leverage.
The US is a key export destination for Indian pharmaceutical companies. Biosimilars-focused Biocon Biologics Limited (BB-/Stable) derives around 40 per cent of its sales from the US, mostly from production sites in India and Malaysia. Significant US tariffs on pharmaceutical products are not yet factored into our rating base case and could pose downside risks to its operating performance. The competitive industry landscape could limit Biocon’s ability to pass on higher costs, despite the non-discretionary demand for its products.
UPL Corporation Ltd
US customers constitute 10-12 per cent of total revenue for crop-protection chemical producer UPL Limited (UPL), whose consolidated profile forms the basis for the rating of its subsidiary UPL Corporation Ltd (BB/Stable). Tariffs on UPL’s products manufactured in India are set to move closer to those on products from China, potentially affecting its competitive position in the US. Nevertheless, UPL benefits from significant geographical and product diversification. “We believe it will still be able to meet its EBITDA growth guidance of 10-14 per cent in constant currency terms, and we see limited risk to our EBITDA growth estimate of 11 per cent (in US dollar terms) and leverage forecast for the financial year ending March 2026 (FY26),” Fitch says.
Divert Supply to Other Markets
Russian crude accounts for about 30-40 per cent of crude imports for Indian oil marketing companies (OMCs), with its discounted price supporting their EBITDA and profitability. Our base case is that the Indian government will not limit OMC purchases of Russian crude. “If these were curtailed, it would hurt OMCs’ EBITDA, but we estimate that the EBITDA impact would be around 10 per cent in the case of a full halt.” Fitch says.
“We expect that the support-driven OMCs’ Issuer Default Ratings, such as those of Bharat Petroleum Corporation Limited (BBB-/Stable), Indian Oil Corporation Ltd (BBB-/Stable) and Hindustan Petroleum Corporation Limited (HPCL, BBB-/Stable), would be unaffected under this scenario.”
According to Fitch, HPCL-Mittal Energy Limited (BB+/Stable), however, has a lower rating buffer and its credit profile could be more vulnerable to a sharp deterioration in earnings that would hinder its deleveraging prospects.
Fitch currently assumes a minimal direct tariff impact on Indian IT service companies and domestically focused sectors such as upstream and downstream oil and gas, cement and building materials, engineering and construction, telecoms, and utilities.
“However, if US tariffs are sustained at levels significantly higher than in other Asian markets, we see moderate downside risks to our projection that the economy will grow by 6.5 per cent in FY26.” Says Fitch.
“This would weigh on the operating performance of more Indian companies. India’s corporates could also be affected if US tariffs divert supply to other markets, including India, as this could present downside risks to our domestic price assumptions for some products, such as steel and chemicals.”
