“Emerging economies need agencies that understand them” 

Sachin Gupta, Executive Director and Chief Rating Officer of CARE Ratings Limited 

• “When I look at what has worked in India, I believe the key factor has been regulation. 
• “We have implemented clear, strong regulation — as in renewables and roads — we have managed to attract significant foreign direct investment, including from sovereign wealth funds, global equity players, and private equity funds.”

• “Within 10 to 15 years, India will stand clearly among the top three economies globally, alongside the United States and China.”

During a visit to Mauritius, Sachin Gupta, Executive Director and Chief Rating Officer of CARE Ratings Limited, offered an in-depth perspective on his extensive career in the credit ratings industry, the evolution of India’s financial sector, the emergence of domestic rating capabilities, and global shifts impacting emerging economies. In this interview with Bizweek, he reflects on the future of the India-Mauritius partnership and the opportunity for countries to shape their own ratings narrative.

Rudy Veeramundar 

Mr Gupta, could you tell us about your professional journey?

I completed my schooling, engineering degree and MBA, all in Delhi. My career began with a rating agency, where I worked as a financial sector analyst at CRISIL, which is a subsidiary of Standard & Poor’s. From the day I joined, I must say it was love at first sight. I realised immediately how much I enjoyed being an analyst: working with numbers, meeting people, and having those interesting, intellectually stimulating conversations. That really clicked for me, and I liked it tremendously.

My professional path has largely been within rating agencies. Over the past 25 years, around 22 of those years have been in the ratings industry across multiple areas. I have worked on financial sector ratings, infrastructure ratings, and spent about a year at S&P in London, where I was overseeing the offshoring of certain work from S&P to India. I have also been actively involved in the business development side, building relationships, in addition to my role as an analyst. It has been a fantastic journey.

In my current role as Chief Rating Officer at CARE Ratings, which I assumed a little more than four years ago, the experience has been equally exciting. At CARE, we have a portfolio of more than 5,000 rated companies across India, spanning finance, infrastructure, and other sectors. It has been a very satisfying experience personally, because I remain an analyst at heart and I truly engage with the work. Even on this trip to Mauritius, I have been meeting many companies and having valuable discussions on how the Mauritian economy is performing, how the corporate sector is faring, which industries are showing promise, and where growth is coming from. I genuinely love my job in every sense.

You are not only in a leadership role, but also deeply involved in the analytical side. Could you elaborate?

Yes, absolutely. In addition to my management role, I also chair the rating committees that decide and assign ratings, both in India and Mauritius. To fulfil my responsibilities as chairman of these committees, I have to be fully aware of what is happening globally and across a wide range of sectors. It is a very satisfying role, but at the same time, it demands a high degree of understanding, constant reading, and continuous learning.

You also spent time in London. How did you experience that transition?

It was an extremely valuable experience. I was there with CRISIL, my employer at the time, and the objective was to evaluate what processes could be transferred from S&P to India. This was around 2004-2005, nearly 20 years ago. London is, of course, a fantastic city, but professionally, it was a great challenge to convince colleagues at S&P London that Indian teams could deliver work of equal, if not superior, quality. There was a significant cost advantage to offshoring, which supported the case, but it was still important to win their confidence. That initiative has since become a success story, as many international companies have transferred operations from higher-cost locations in London and New York to India.

In the early 2000s, ratings were not very familiar in many developing or Asian economies. How did that landscape change?

That is a very good question. When I started my career in 2000, there were only about 800 to 900 companies rated across the entire country of India, which is of course a very large economy. At that time, only the most prominent companies and large banks were rated. Most of the corporate sector was not rated at all.

If we look at today’s figures, India now has nearly 20,000 rated companies, across large, mid-sized, and even small enterprises. That is a fundamentally different scale. Ratings have become one of the cornerstones for corporates to be able to borrow from the banking system or raise funds in capital markets. In India, for example, you cannot even borrow a relatively small amount, say USD 10 million, without a rating. So, in that sense, the growth of the credit rating industry has been tremendous.

Around what time did corporate awareness of ratings really accelerate in India?

It has been a journey. The industry itself is about 30 to 35 years old. But as I mentioned, in 2000, there were fewer than 1,000 rated companies. The inflection point came with the Basel II regulatory framework, an international set of standards which was adopted by the Reserve Bank of India. With this, the regulator encouraged more companies to obtain ratings because banks needed greater clarity about the risk exposures they faced when extending loans.

As a result, the number of rated companies grew steadily and at a healthy pace. Today, nearly 20,000 companies are rated — that is a 20-fold growth over about two decades.

How did moving from S&P to CARE Ratings change your responsibilities?

When I joined CARE Ratings in 2021, it required me to relocate from Delhi to Mumbai, where CARE’s head office is located. I am now managing a significantly larger team. In my previous role, I was supervising a team of around 30 to 35 analysts. Now, the team under my responsibility has grown to almost 350 people.

The breadth of my scope has also expanded. Previously, I was focused mainly on corporate and infrastructure ratings, but now I oversee financial services, structured finance, infrastructure, corporates across large and mid-sized enterprises — the range is very wide.

Additionally, as the head of the entire division, I am responsible for HR, IT systems, and initiatives to improve process efficiency. These administrative functions — managing conflicts within the team, overseeing staff transfers — are also part of the role. While those can sometimes be tasks people may not prefer, they are extremely important. Managing a large team of nearly 350 people is demanding but ultimately satisfying, because you feel responsible for ensuring the division functions effectively.

You have witnessed India’s economic development over the last 25 years. How has the investment and economic landscape evolved?

1991 was the year when India liberalised, opening its doors to foreign investors and international companies to set up businesses in the country. That was a watershed moment. At the time, India was facing significant challenges with foreign exchange reserves, current account deficits, and trade imbalances.

Those circumstances effectively forced the head of government — the prime minister and the finance minister — to take bold action. 1991 was really the beginning of a transformational period. Although I was still in school at the time, I remember reading budget documents and speeches, and it left an impression.

If we focus on the last 25 years, India has seen enormous foreign direct investment. Today, the country holds foreign reserves of nearly USD 700 billion and has grown into a large economy. We have been growing steadily between 6 and 8 percent over many years.

Several sectors have driven this growth, including financial services, infrastructure, and manufacturing. One striking example from recent years is renewable energy. India has emerged as a global leader in building new renewable capacity. Currently, India is setting up approximately 15 to 20 gigawatts of new renewable energy every year, with a target of reaching around 500 gigawatts in the future — these are extraordinary figures by any measure.

When I look at what has worked, I believe the key factor has been regulation. Where we have implemented clear, strong regulation — as in renewables and roads — we have managed to attract significant foreign direct investment, including from sovereign wealth funds, global equity players, and private equity funds.

“India will become a major player in global manufacturing, including in defence, where significant government investments and policy support are already underway.”

Another area that has supported growth is India’s financial system. Regulators such as the RBI and SEBI have been very proactive. Even during the global financial crisis or the COVID-19 pandemic, India came through relatively well, in some cases even better than more developed markets. The government’s balance sheet has also remained healthy, with limited borrowing, supporting financial stability.

Strong regulation and strong institutions have provided confidence to foreign investors that India is a stable, rules-based environment. This confidence is visible in our stock market, which is among the most advanced globally in terms of trading technology and settlement systems. Indian corporates also benefit from strong valuation multiples on the back of this trust.

Having said that, India is still in an early phase of its development, with much more to achieve. The government is currently placing a large focus on manufacturing, aiming to become a key participant in the global supply chain. There are visible developments in electronics, textiles, mobile manufacturing, renewable energy — for example solar panels — where India wants to compete on cost and quality to become a credible exporter.

There is some uncertainty with the current tariff regime, and more clarity over the next few weeks or months will help Indian entrepreneurs plan their investments with confidence. But overall, I believe India will become a major player in global manufacturing, including in defence, where significant government investments and policy support are already underway.

How do you assess the economic policy of the United States under the presidency of Donald Trump?

A few things are very clear. The United States under the current administration has been thinking more about what is good for itself rather than what is good for the whole world. There is nothing wrong with that, of course — he is the US president, and naturally he prioritises American interests. Once you know that, you can plan and negotiate accordingly.

From an Indian perspective, I think tariffs will rise, whether by 10, 15, 20, or 25 percent — that is a matter of negotiation — but broadly, tariffs will move upward, creating more cost pressures on Indian exporters.

On the positive side, whether for good or bad, the current US administration is capable of taking quick decisions. If those decisions work in your favour, that is good; if not, you have to manage.

On balance, I believe there will be more opportunities for India in exports, especially in sectors where we have a competitive advantage — textiles, electronics, gems and jewellery, pharmaceuticals, solar energy. These are areas where Indian business owners have robust capabilities. We may have to let go of certain areas where US imports are strong and India currently has high tariffs, but if we adjust those tariffs, there will be more imports from the US. We must protect our domestic industry accordingly.

Overall, I think this is manageable. It will make India more competitive. Competing against global products will help us sharpen our edge.

One key trend, which has been in discussion for the last year or two, is “China Plus One.” There is a clear intention among many companies in Europe and the US to diversify their supply chains away from China. China today accounts for more than 50 percent of global manufacturing output, while India’s share is far smaller. If these large economies, which import most of their products, want to reduce their dependence on China, India emerges as a very strong alternative, at least in some areas where we already connect with the existing value chain.

That, I believe, is one of the key drivers that could open up large opportunities for Indian manufacturing.

Mr Sanjeev Sanyal stated, during a visit to Mauritius, that India has the ambition to be one of the top five global economies. How is this progressing?

Since Mr Sanyal spoke about that ambition, we have already moved from fifth to fourth largest. Becoming the third largest is not very far away. We have to acknowledge that the global backdrop is difficult — there are challenges in the US, some in China’s financial sector and real estate sector, and Europe is growing very slowly.

In this context, India, now the fourth largest economy, is still growing at 6-7 percent. Even looking ahead, the outlook remains positive. If we can build on the “China Plus One” opportunity, strengthen our manufacturing, and maintain growth at 8 to 8.5 percent — which many believe is achievable — then, within 10 to 15 years, India will stand clearly among the top three economies globally, alongside the United States and China.

“India is still in an early phase of its development, with much more to achieve.”

The global situation is highly conflictual and volatile, with wars ongoing. How does this impact India’s economic strategy?

Wars are deeply unfortunate. The Russia-Ukraine conflict, and now the Iran-Israel tensions — even if the latter was reportedly a 12-day war, there is still volatility — all of these affect global stability.

For India, these conflicts affect us in a few ways. One is trade, especially because a lot of our crude oil passes through these regions. If tensions escalate, shipping may have to go through much longer routes. Already, many ships are avoiding the Red Sea and are going around the Cape of Good Hope, which adds time and cost.

Apart from trade, the biggest impact is on the investment climate. When there is war, whether trade war or actual war, investors prefer to wait. Entrepreneurs and corporates want a stable environment before they commit to large investments. Because India expects a bigger chunk of growth to come from investment rather than consumption, that affects us more.

Currently, our 6.5 percent growth is largely consumption-driven. The next step — investment-led growth — will only come when the geopolitical climate is more peaceful and predictable.

On a day-to-day basis, India is not hugely affected, but the lack of investment confidence is a critical challenge.

How do you anticipate global growth by the end of the year?

It is extremely difficult and risky to forecast in the current environment. In India, we remain confident of sustaining 6 to 6.5 percent growth, primarily because we are not a heavily export-driven economy. That insulates us — we have less to lose in global trade volatility.

Globally, I believe inflation will be the first casualty if trade wars do not subside. Everyone is applying higher tariffs on imports, and many economies are dependent on those imports. So, if tariffs continue in their current form, inflation will rise. We are already seeing this in some economies.

After COVID-19, inflation was a major challenge, and central banks raised interest rates to counter it. If inflation rises again due to tariff policies, interest rates will likely stay high, raising the cost of capital and delaying investments.

These are the two factors I will watch closely — inflation and interest rates — because they are critical to growth and investment.

If tariffs become more rational, and if conflicts settle down, then interest rates and inflation could remain under control, creating a better investment climate. That is what we are hoping for in the next six to twelve months.

Returning to ratings, Mr Sanyal argued that India and the world should not let agencies like Moody’s or S&P alone define their economic fate. How does CARE Ratings view this?

CARE Ratings has taken very important steps not only for India, but for the entire developing world. We are building an international sovereign rating capability, looking at rating sovereign governments, international bond issuances, and with a strong focus on Africa.

After running a rating agency for more than 30 years and observing how global agencies operate, I believe they often fail to appreciate the real challenges and the strengths of emerging economies. While they see the numbers — debt ratios, inflation levels — they often do not see the reforms or structural improvements taking place.

The largest financial stress incidents have not occurred in emerging markets, but in southern European countries and, more recently, even the US, which was downgraded. That tells you the risk is more nuanced.

In places like Africa, the lack of ratings or very expensive ratings is starving infrastructure of capital, which causes anemic growth. Either there is no funding, or the funding is at a prohibitive cost. CARE believes there is a huge role for domestic rating agencies, supported by strong local understanding.

For example, we are active here in Mauritius, and we have licences in South Africa and Kenya. That allows us to support both domestic fundraising and access to international markets. It is high time that emerging economies have agencies which truly understand their environment and rate them accordingly.

 Mauritius is wary of a possible Moody’s downgrade. What is your view?

I saw the budget that was just presented. I understand from conversations here that many people are unhappy with measures like higher taxes, pension reviews, or the way benefits for the wealthy and even the poor have been adjusted. These steps are not popular.

However, if I look at it strictly from an economic and analytical perspective, perhaps these were necessary. Maybe Mauritius was offering more social incentives than its fiscal position could support. These measures, although bitter, might improve the country’s financial health in the long run.

That should help maintain a strong currency, lower interest rates, and attract more capital. My advice would be that the government should not manage policy from the fear of a downgrade alone. It should manage from the need to build a more financially sound economy. Over time, that will reassure investors and stabilise ratings naturally.

Finally, how do you see the India-Mauritius partnership?

It is a strong partnership, and Mauritius feels almost like India to me. I see several opportunities to strengthen it further.

India has reputable infrastructure companies that could invest in Mauritius, especially in areas like green energy. India is among the world’s most cost-effective and highest-quality solar energy markets. Mauritius, as an island nation, is naturally dependent on imports of certain essential commodities, and India is well placed to supply these.

In addition, Mauritius has a respected legal system and a strong international financial centre. That gives it an edge for building a global services hub. I think there is real scope for India and Mauritius to collaborate further on trade, investment, and offshoring services.