India's external debt increased to USD 762.8 billion at the end of March 2026, with the rise largely attributed to higher borrowings by the private sector, even as the general government's outstanding debt decreased, according to data released by the Reserve Bank of India (RBI) on June 30.
Key Drivers of External Debt Increase
The RBI data showed that India's external debt rose by USD 26.3 billion compared to its level at the end of March 2025. The central bank stated that outstanding debt of the general government declined during the year, while non-government debt increased, indicating that corporates, banks, and other financial institutions primarily drove the rise in external borrowings.
"Outstanding debt of the general government decreased, while non-government debt increased at end-March 2026 over the level a year ago," the RBI said in its statement.
Composition of External Debt by Sector
Non-financial corporations accounted for the largest share of India's external debt at 36.4 percent at the end of March 2026. Deposit-taking corporations, excluding the central bank, made up 26.5 percent of total external debt, followed by the general government at 22.0 percent and other financial corporations at 10.2 percent.
External Debt-to-GDP Ratio
The RBI data also revealed that India's external debt-to-GDP ratio rose to 20.8 percent at the end of March 2026, up from 19.8 percent a year earlier. This increase reflects the faster growth of external debt relative to nominal GDP.
Impact of Valuation Changes
The central bank noted that valuation effects arising from the appreciation of the US dollar against the Indian rupee and other major currencies amounted to USD 24.6 billion. Excluding this valuation effect, India's external debt would have increased by USD 51.0 billion instead of the reported USD 26.3 billion during the year.
Long-Term and Short-Term Debt Trends
Long-term debt, with an original maturity of more than one year, stood at USD 613.5 billion at the end of March 2026, recording an increase of USD 11.6 billion from a year ago. Meanwhile, the share of short-term debt in total external debt increased to 19.6 percent from 18.3 percent a year earlier. The ratio of short-term debt to foreign exchange reserves also rose to 21.6 percent from 20.1 percent.
Currency Composition of External Debt
Debt denominated in US dollars remained the largest component, accounting for 55.5 percent of total external debt. This was followed by debt denominated in Indian rupees at 29.4 percent, Japanese yen at 6.4 percent, Special Drawing Rights (SDR) at 4.3 percent, and euro at 3.7 percent.
Instrument-Wise Breakdown
In terms of composition, loans remained the largest component of external debt with a share of 34.7 percent, followed by currency and deposits at 22.3 percent, trade credit and advances at 19.0 percent, and debt securities at 16.1 percent.
