India’s external debt rose to $762.8 billion at the end of March 2026, marking an increase of $26.3 billion compared to the previous year, according to the latest data released by the Reserve Bank of India (RBI). The central bank said the increase was influenced by both fresh borrowings and changes in global currency values, particularly the strengthening of the US dollar.
The latest figures indicate a gradual rise in India’s overseas liabilities even as the country’s economy continues to expand.
Stronger US Dollar Played a Major Role
The RBI said a large part of the increase in external debt was due to valuation effects, which occur when exchange rate movements change the value of debt denominated in foreign currencies.
According to the central bank, the appreciation of the US dollar against the Indian rupee and several other global currencies added around $24.6 billion to the debt stock. Without this currency impact, India’s external debt would have increased by nearly $51 billion over the past year.
Debt-to-GDP Ratio Moves Higher
The report also showed that India’s external debt-to-GDP ratio increased from 19.8 per cent a year ago to 20.8 per cent by the end of March 2026.
Although the increase is relatively modest, it indicates that overseas borrowings have grown slightly faster than the country’s economic output over the past year.
Economists generally monitor this ratio closely as an indicator of a country’s external financial position.
Short-Term Borrowings Rise Faster
The RBI data revealed that long-term external debt, which includes borrowings with a maturity of more than one year, reached $613.5 billion, registering a moderate increase during the year.
However, short-term debt recorded faster growth, increasing its share in India’s total external debt from 18.3 per cent to 19.6 per cent.
The central bank also noted that the ratio of short-term debt to India’s foreign exchange reserves increased from 20.1 per cent to 21.6 per cent, reflecting a slight rise in near-term repayment obligations.
US Dollar Continues to Dominate Borrowings
The RBI said the US dollar remains the primary currency for India’s external borrowings.
More than half of the country’s total external debt, 55.5 per cent, is denominated in US dollars.
This is followed by:
- Indian rupee – 29.4%
- Japanese yen – 6.4%
- Special Drawing Rights (SDR) – 4.3%
- Euro – 3.7%
The currency composition highlights India’s continued dependence on dollar-based international financing.
Loans Continue to Form Largest Share
Among different borrowing instruments, loans accounted for the biggest share of India’s external debt at 34.7 per cent.
They were followed by:
- Currency and deposits – 22.3%
- Trade credit and advances – 19%
- Debt securities – 16.1%
The RBI also observed that while the government’s external debt declined slightly during the year, borrowings by non-government entities, including private companies and financial institutions, increased.
RBI Data Reflects Gradual Rise in Overseas Liabilities
The latest RBI report points to a steady increase in India’s external debt, accompanied by a larger share of short-term borrowings and continued reliance on dollar-denominated loans.
While India’s debt levels remain manageable by international standards, economists will closely watch future borrowing trends, exchange rate movements and global financial conditions, as these factors could influence the country’s external financial stability in the coming years.
