India's external debt rises to $762.8 bn, driven by private sector

India's external debt climbed to USD 762.8 billion by March 2026, an increase of USD 26.3 billion. The RBI report attributes this rise mainly to increased borrowing by the private sector, even as government debt decreased.

India's external debt rose to USD 762.8 billion at the end of March 2026, with the increase largely driven by higher borrowings from the private sector even as the outstanding debt of the general government declined, according to data released by the Reserve Bank of India (RBI).

The RBI data showed that India's external debt increased by USD 26.3 billion over its level at the end of March 2025.

According to the central bank, outstanding debt of the general government decreased during the year, while non-government debt registered an increase, indicating that the rise in external borrowings was primarily driven by corporates, banks and other financial institutions. It stated "Outstanding debt of the general government decreased, while non-government debt increased at end-March 2026 over the level a year ago"

Debt Composition by Holder

The data showed that non-financial corporations accounted for the largest share of India's external debt at 36.4 per cent at the end of March 2026. Deposit-taking corporations, excluding the central bank, accounted for 26.5 per cent of total external debt, followed by the general government at 22.0 per cent and other financial corporations at 10.2 per cent.

Debt-to-GDP Ratio and Valuation Effects

The RBI data also showed that India's external debt-to-GDP ratio increased to 20.8 per cent at the end of March 2026 from 19.8 per cent a year earlier. 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 USD 26.3 billion during the year.

Long-Term vs. Short-Term Debt

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 per cent from 18.3 per cent a year earlier. The ratio of short-term debt to foreign exchange reserves also rose to 21.6 per cent from 20.1 per cent.

Currency Composition of Debt

The RBI data showed that debt denominated in US dollars remained the largest component of India's external debt, accounting for 55.5 per cent of the total. This was followed by debt denominated in Indian rupees at 29.4 per cent, Japanese yen at 6.4 per cent, Special Drawing Rights (SDR) at 4.3 per cent and euro at 3.7 per cent.

Instrument-wise Debt Breakdown

In terms of composition, loans remained the largest component of external debt with a share of 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.

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