It's nothing personal.

India's sovereign credit rating by the US agencies are at investment grade, with S&P (BBB) and Moody's (Baa3) rating it at one notch above investment level and Fitch (BBB-) just above speculative level. The Global Economy. There are 25 countries rated BBB by S&P, including India with per capita GDP at $2,810 and British Virgin Islands at $46,710. Brazil rated BB has per capita GDP of $12,335 and Vietnam rated BB+ has per capita GDP of $5,300, but are both rated below India. Even CareEdge Global Ratings currently rates India at BBB+ with a stable outlook. Mint. Just recently, "The Government of India welcomes the decision Of Japan Credit Rating Agency (JCR) to upgrade India's Long-Term Foreign Currency and Local Currency Issuer Ratings by one notch from 'BBB+' to 'A-', while maintaining the Stable Outlook. JCR also raised India's country ceiling by one notch to 'A'." pib.gov.in. Does this mean that the JCR is fair to India while the US companies are biased? Firstly, it is not clear whether the currency and country ratings by JCR are the same as the sovereign credit rating. Secondly, US foreign portfolio investors (FPI) hold 41% of India's equity and debt markets. "In absolute terms, US based FPI holdings increased from Rs 29.5 trillion in January 2025 to Rs 32.1 trillion in January 2026." Debt investments rose by Rs 150 billion. AngelOne. In 2024, Japanese FPI investment into India was Rs 2.06 trillion less than 3% of the total FPI investment into Indian stocks. MC. Since the exposure of US companies is more than 10 times that of Japanese companies, the US rating agencies may err on the side of caution. Also the Reserve Bank of India (RBI) seems extremely reluctant to raise interest rates to tackle rising inflation unless forced to do so. In its August meeting, the RBI "kept the repo rate unchanged at 5.25% for the fourth consecutive monetary policy review, signalling that interest rates are likely to remain stable for now," even as it increased its projection for retail inflation from 5% to 5.1%. Mint. This was expected by the markets. "Over time, a fairly settled view of RBI has emerged. It is widely seen as an institution that prefers to wait rather than tighten policy unless inflation becomes impossible to ignore or external developments leave it with little room for maneuver ." "Inflation has been rising and inflation expectations are showing signs of firming up. Yet very few analysts bet on a rate hike," wrote Puja Mehra. If prices in India are rising faster than in the US, the Indian rupee will weaken against the US dollar. In May, the Indian rupee fell to a record low of 96.96 to one US dollar "as the stalled US-Iran peace talks kept oil prices elevated, driving global bond yields higher and hurting equities amid fear of further central bank rate hikes." Reuters. The USD is trading at 94.6978 to one dollar this morning. xe.com. How did the RBI achieve this? "It turned to overseas Indians, luring them with attractive sweeteners." The FCNR (B) "might have bailed us out, but only for the moment. They have to be repaid, and in dollars." "It is a telling commentary that at a time when yields and interest rates are rising all over the world, for reasons that are far from clear, India's central bank alone seems to believe in 'Indian exceptionalism'. The world doesn't," wrote Mythili Bhusnurmath. As a result, "The gap between India's 10-year government bond yield and the US 10-year Treasury yield has narrowed sharply to levels last seen many years ago, changing the equation for the rupee, foreign investors and the RBI's monetary policy." MC. Foreign investors have to account for the falling rupee. "A total of 64.3% of India's population, which represents 940 million people, are now covered under at least one social protection benefit," according to the International Labor Organisation. TNIE. Which puts a big question mark over tax collection and fiscal deficit. The RBI may not care about Indian citizens, foreign investors are responsible to their people. Hence they rate us low. Pure economics. Nothing personal.