A better operating environment with increasing government spending and a likely improvement in the domestic economy will support growth. At the same time, India faces the risk of debt concentration. More importantly, we see them moving in opposite directions. Private entities account for about 75 per cent of net debt and EBITDA of the top 200 Indian companies, compared with less than 20 per cent for the top Chinese companies. But much of the improvement in operating conditions in India could depend on its infrastructure, which remains inadequate. Though the revenue growth for companies in India and China are trending down, the rating agency expects the performance for India’s top companies to improve over the next two to three years. India also suffers from a high interest rate environment when compared with other emerging Asian economies. While leverage has peaked for Indian companies overall, it continues to increase for Chinese government related entities. However, the rating agency added that poor infrastructure could become a hurdle for the government’s ambitious ‘Make in India’ programme that aims to turn India into a top global manufacturing destination. According to S&P, there is a significant difference in the size of the private sectors in India and China. About 15 per cent of the companies in the sample account for 60 per cent of net debt. This directly affects companies’ flexibility to reduce capital spending, generally results in weaker profitability, and eventually China Reusable Fabric Mask shows up in higher leverage,” said Mehul Sukkawala, credit analysts at S&P Global Ratings.India’s top companies are set to outperform their Chinese peers despite the country’s infrastructure bottlenecks. “Our analysis of India’s top 200 companies by market capitalisation against their Chinese counterparts shows that government influence is far greater for listed companies in China than in India. According to global rating agency Standard & Poor’s , Indian private companies outperform both the Indian government-related entities and Chinese companies by registering the highest returns.. “The credit cycles in India and China are at different stages. The credit risk has peaked in India and will only lessen from here on, whereas in China, it will increase over the next two to three years with excess capacity eroding profitability,” added Mr Sukkawala.

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