Net Claims of Non-Residents Decline by USD 52.4 Billion
India's net international investment position (IIP) improved significantly during the January-March quarter of FY2025-26, with net claims of non-residents on the country declining by USD 52.4 billion to USD 209.9 billion as of end-March 2026, according to data released by the Reserve Bank of India (RBI) on Tuesday.
The improvement was driven by a USD 40.1 billion decline in foreign-owned assets in India, alongside a USD 12.3 billion increase in overseas financial assets held by Indian residents. The RBI noted that exchange rate movements, particularly the depreciation of the rupee against major currencies, also influenced the valuation of external liabilities in US dollar terms.
Foreign Liabilities Fall Due to Portfolio and Direct Investment Decline
Foreign liabilities declined mainly due to a fall in portfolio investment and direct investment in India. While inward foreign direct investment increased in rupee terms, its value declined in US dollar terms because of exchange rate depreciation, the central bank said.
On the assets side, overseas direct investment accounted for more than 60 per cent of the increase in Indian residents' overseas financial assets during the quarter, followed by reserve assets. Reserve assets continued to dominate India's international financial assets, accounting for 57.1 per cent of the total, while overseas direct investment contributed around one-fourth.
Ratio of Assets to Liabilities Improves to 85.2%
The ratio of India's international financial assets to international financial liabilities improved to 85.2 per cent at the end of March 2026, up from 82 per cent at the end of December 2025, reflecting a strengthening of the country's external balance sheet. However, the share of debt liabilities in India's total external liabilities continued to rise, reaching 56.6 per cent at the end of March 2026.
For the full financial year 2025-26, the RBI said net claims of non-residents declined by USD 119.2 billion. This was supported by a USD 42.8 billion reduction in external financial liabilities, largely due to rupee depreciation against the US dollar, and a USD 76.4 billion increase in Indian residents' overseas financial assets.
Annual Increase in Overseas Assets Driven by Direct Investment and Reserves
The central bank said the annual increase in overseas financial assets was primarily driven by higher overseas direct investment and reserve assets, while lower portfolio and direct investments by non-residents led to a decline in India's external liabilities.
As a result, the ratio of India's international financial assets to international financial liabilities rose to 85.2 per cent in March 2026 from 77.5 per cent a year earlier. The ratio of net claims of non-residents on India to GDP also improved to (-)5.9 per cent from (-)9.0 per cent in March 2025, indicating a stronger external position.
