S&P Global Ratings stated on Thursday that the ongoing hostilities between India and Pakistan increase the credit risks for both nations, with any further escalation potentially exerting downward pressure on sovereign credit ratings. Currently, S&P has rated India at 'BBB-' with a positive outlook and Pakistan at 'CCC+' with a stable outlook. However, S&P does not anticipate an immediate impact on the sovereign ratings. It expects tensions to remain elevated for the next two to three weeks, with the possibility of significant military actions from both sides.

S&P highlighted that the regional credit risks have escalated due to the India-Pakistan conflict, but it projects the intense military actions to be temporary, with a period of sporadic and contained confrontations likely to follow. Following the Pahalgam massacre, India launched 'Operation Sindoor' on Wednesday, targeting nine terrorist sites in Pakistan and Pakistan-occupied Kashmir. In response, Pakistani leaders have expressed the right to retaliate but also indicated a willingness to de-escalate if India takes steps to reduce tensions.

S&P expects India to maintain robust economic growth, which will support fiscal improvements, and for Pakistan to focus on economic recovery and fiscal stability. Both nations are unlikely to prolong the current tensions, S&P noted. However, a prolonged military conflict would hinder Pakistan's efforts to stabilize its economy and external metrics. For India, such a conflict could deter foreign investors who are already navigating an uncertain global economic environment.

S&P also warned that the ongoing situation carries the risk of miscalculations or accidental clashes, which could escalate beyond the control of either side, further harming credit risks. If tensions don't de-escalate in the coming weeks, the downward pressure on sovereign credit ratings will intensify. S&P anticipates that tensions will remain high for a few weeks before de-escalating, with limited long-term negative impact on sovereign credit metrics. Meanwhile, Moody's also expressed concern about the potential downside risks to India's growth forecasts due to geopolitical tensions, such as the India-Pakistan conflict.
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The Asian Development Bank (ADB) on Monday clarified that no issues related to Pakistan were discussed during the bilateral meeting between ADB President Masato Kanda and Indian Finance Minister Nirmala Sitharaman. This clarification came in response to media reports suggesting otherwise. The meeting took place on the sidelines of the 58th Annual Meeting of the ADB Board of Governors in Milan, Italy.

In an official statement, the ADB noted that it is aware of reports claiming Pakistan-related matters were part of the agenda but confirmed that such issues were not discussed. Indian Finance Ministry officials also affirmed that neither the meeting with ADB President Kanda nor the one with Italian Finance Minister Giancarlo Giorgetti involved any conversation on Pakistan.

During her meeting with Kanda, Sitharaman emphasized India’s focus on private sector-led economic growth. She highlighted various policy reforms and initiatives aimed at creating a supportive environment for investment and development. The discussions centered around India’s economic progress and its role in regional growth.

This clarification comes amid rising tensions between India and Pakistan following a recent terror attack in Pahalgam. While political and security concerns remain high, the Indian government has stated that those responsible for the attack will face strict consequences. Sitharaman is in Milan from May 4 to 7, 2025, attending the 58th ADB Annual Meeting. Her engagements reflect India’s commitment to regional cooperation and sustainable economic development, keeping the focus on growth and stability rather than political disputes.
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Saudi Arabia’s efforts to invest in two major oil refineries in India are being delayed due to disagreements over crude oil supply terms, according to people familiar with the negotiations. Although both countries recently agreed to collaborate on these refinery projects—part of Saudi Arabia’s strategy to secure demand in fast-growing markets like India—the talks have stalled. The sticking point is Saudi Arabia’s push to supply up to 50% of the crude needed for the refineries at its official selling prices (OSPs), which often exceed market rates. India, on the other hand, wants Saudi supply to match its planned 20% equity stake and be offered at a discount to OSPs.

Neither India’s oil ministry nor its project partners, Bharat Petroleum Corp. Ltd. (BPCL) and Oil and Natural Gas Corp. (ONGC), responded to requests for comment. Saudi Aramco also did not immediately reply. According to Aramco’s latest annual report, the company is targeting high-growth regions like India, China, and Southeast Asia to establish multibillion-dollar refinery ventures that ensure long-term crude demand and provide stability amid market fluctuations. While Aramco held an average 35% stake in overseas refiners in 2024, it supplied about 53% of their crude needs.

Saudi Arabia is also attempting to regain market share in India, which it has lost due to increased imports of discounted Russian crude. Failing to secure these projects would be diplomatically damaging, particularly after Crown Prince Mohammed bin Salman committed $100 billion in Indian investments during a 2019 meeting with Prime Minister Narendra Modi—of which only about 10% has come through.

Past attempts at major partnerships have already fallen through, including a $60 billion refinery with ADNOC and Indian state firms that was scrapped over land issues, and a planned 20% stake in Reliance Industries that never materialized. This has increased urgency around the BPCL refinery on India’s east coast and ONGC’s proposed plant in Gujarat. However, without a deal on discounted crude supplies, Indian partners see limited advantage in bringing in Saudi investment, especially when domestic financing is readily available. Saudi Arabia is also considering acquiring up to a 15% stake in Indian Oil Corp.’s Panipat refinery, though this proposal is still under review by the Indian government.
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On Monday, Commerce and Industry Minister Piyush Goyal held a “productive” meeting with Jonathan Reynolds, the UK Secretary of State for Business and Trade, as part of his two-day visit to the UK. The discussion focused on advancing the long-pending Free Trade Agreement (FTA) negotiations. Goyal shared on X, "Arrived in London for two days of engaging discussions aimed at strengthening bilateral trade and investment relations. In my first engagement, I had a productive meeting with Jonathan Reynolds to push forward FTA talks, reinforcing our commitment to enhancing India-UK economic ties."

The talks centered on reducing tariffs, expanding market access, and simplifying trade regulations through the FTA. The urgency to finalize the deal is driven by the US’s plan to implement country-specific reciprocal tariffs, which are now delayed until July 9. This meeting takes place amid a global trade shift due to protectionist policies from the US.

Government officials indicated that negotiations between India and the UK are nearing completion. Earlier this month, Finance Minister Nirmala Sitharaman visited London to further push bilateral investment treaty (BIT) discussions. However, both sides have faced challenges in resolving differences over dispute resolution mechanisms.

In an effort to move forward, the Union Budget for 2025-26 proposed revamping India’s current BIT model to make it “more investor-friendly” to attract foreign investment. Besides BIT, a few other issues remain unresolved, including India's push for a social security pact and the UK’s demand for greater market access in financial services. India has also raised concerns over the UK’s planned carbon border adjustment mechanism, set to take effect in 2027, while the UK has been pressing for lower tariffs on whiskey and automobiles.

India and the UK resumed formal FTA, BIT, and social security agreement negotiations in February after nearly a year-long break. This marks the second meeting between Goyal and his UK counterpart since the relaunch of FTA talks. These negotiations began in January 2022, with an ambitious goal of concluding the deal within nine months. However, political instability in the UK, unresolved issues, and elections in both countries delayed the process.
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