India's external debt rises to $762.8 billion at end-March 2026: RBI data
Synopsis
India's external debt crossed $762.8 billion at end-March 2026, but the headline number masks a sharper underlying rise: strip out the dollar's appreciation effect and the actual increase was $51 billion, not $26.3 billion. Non-government borrowings drove the build-up even as sovereign debt fell — a structural shift worth watching.
Key Takeaways
India's external debt reached $762.8 billion at end-March 2026 , up $26.3 billion from end-March 2025, per RBI data.
The external debt-to-GDP ratio rose to 20.8 per cent from 19.8 per cent a year earlier.
Excluding valuation effects, external debt would have risen by $51.0 billion — the US dollar's appreciation masked $24.6 billion of the increase.
Short-term debt as a share of total external debt rose to 19.6 per cent ; its ratio to forex reserves climbed to 21.6 per cent .
The debt service ratio improved to 5.8 per cent of current receipts from 6.6 per cent a year ago.
Non-financial corporations held the largest borrower share at 36.4 per cent ; loans were the dominant instrument at 34.7 per cent .
India's external debt stood at $762.8 billion as of end-March 2026, rising by $26.3 billion compared to end-March 2025, according to data released by the Reserve Bank of India (RBI) on Monday, 29 June 2026. The external debt-to-GDP ratio climbed to 20.8 per cent from 19.8 per cent a year earlier, reflecting a steady build-up in non-government borrowings even as sovereign debt obligations contracted.
Key Movements in Debt Composition
Outstanding government debt declined over the year, while non-government debt rose — a trend that points to increasing reliance on private-sector and corporate external borrowings. Long-term debt (original maturity above one year) totalled $613.5 billion, up $11.6 billion from end-March 2025. Short-term debt's share in total external debt edged up to 19.6 per cent from 18.3 per cent, and its ratio to foreign exchange reserves rose to 21.6 per cent from 20.1 per cent.
Short-term debt on a residual maturity basis — which includes long-term debt maturing within the next twelve months — constituted 42.9 per cent of total external debt and stood at 47.3 per cent of foreign exchange reserves, up from 41.2 per cent and 45.4 per cent respectively at end-March 2025.
Valuation Effect and the Dollar's Role
A significant portion of the headline increase was offset by currency valuation effects. The appreciation of the US dollar against the Indian rupee and other major currencies resulted in a valuation gain of $24.6 billion. Excluding this effect, external debt would have risen by $51.0 billion — nearly double the reported increase — underscoring how rupee depreciation has cushioned the reported dollar-denominated total.
US dollar-denominated debt remained the dominant component at 55.5 per cent of total external debt, followed by Indian rupee-denominated debt at 29.4 per cent, Japanese yen at 6.4 per cent, Special Drawing Rights (SDR) at 4.3 per cent, and the euro at 3.7 per cent.
Who Owes What: Borrower and Instrument Breakdown
Non-financial corporations held the largest share of outstanding external debt at 36.4 per cent, followed by deposit-taking corporations (excluding the central bank) at 26.5 per cent, general government at 22.0 per cent, and other financial corporations at 10.2 per cent.
By instrument, loans remained the biggest category at 34.7 per cent, followed by currency and deposits at 22.3 per cent, trade credit and advances at 19.0 per cent, and debt securities at 16.1 per cent.
Debt Servicing Improves
Despite the rise in overall debt, the debt service ratio — comprising principal repayments and interest payments as a share of current receipts — improved to 5.8 per cent at end-March 2026, down from 6.6 per cent at end-March 2025. This suggests that India's capacity to service its external obligations relative to export and income receipts has strengthened over the year.
With the short-term debt ratio to reserves inching upward and the dollar's dominance intact, the trajectory of the rupee and US interest rate policy will remain critical variables for India's external debt outlook in the coming quarters.
Point of View
The real underlying rise was $51 billion, nearly double. That gap deserves more scrutiny than it typically receives in coverage of RBI data releases. The steady climb in short-term debt's share of forex reserves — now at 21.6 per cent — is a metric worth monitoring closely: it is still well within safe thresholds, but the direction is consistently upward. The shift from government to non-government debt as the primary driver also raises questions about corporate external borrowing costs in a high-US-rate environment, and whether Indian firms have adequately hedged their dollar exposure.
NationPress
29 Jun 2026
Frequently Asked Questions
What is India's total external debt as of March 2026?
India's external debt stood at $762.8 billion at end-March 2026, an increase of $26.3 billion over end-March 2025, according to RBI data released on 29 June 2026. The external debt-to-GDP ratio rose to 20.8 per cent from 19.8 per cent a year earlier.
Why did India's external debt increase by less than the actual borrowing?
The appreciation of the US dollar against the Indian rupee and other major currencies created a valuation effect of $24.6 billion, which reduced the reported dollar-denominated total. Without this effect, external debt would have risen by $51.0 billion rather than $26.3 billion.
How has India's debt servicing capacity changed?
India's debt service ratio improved to 5.8 per cent of current receipts at end-March 2026, down from 6.6 per cent at end-March 2025. This indicates that India's ability to meet principal and interest obligations relative to its export and income receipts has strengthened.
What is the share of short-term debt in India's external debt?
Short-term debt (original maturity up to one year) accounted for 19.6 per cent of total external debt at end-March 2026, up from 18.3 per cent a year earlier. Its ratio to foreign exchange reserves also rose to 21.6 per cent from 20.1 per cent.
Which currency dominates India's external debt?
US dollar-denominated debt is the largest component at 55.5 per cent of total external debt at end-March 2026. It is followed by Indian rupee-denominated debt at 29.4 per cent, Japanese yen at 6.4 per cent, SDR at 4.3 per cent, and euro at 3.7 per cent.
