India's External Debt Surges to US$ 762.8 Billion as Global Economic Shifts Reshape Debt Profile

India's External Debt Surges to US$ 762.8 Billion as Global Economic Shifts Reshape Debt Profile​

The Reserve Bank of India (RBI) has released a comprehensive update on the nation's external debt status as of March 2026, confirming significant growth in the total outstanding amount. Total external debt reached US$ 762.8 billion, marking an increase of US$ 26.3 billion compared to March 2025. This data provides a granular look at the composition and maturity profile of India’s borrowing base amid evolving global financial conditions.

External Debt Reaches New High Mark Amid Currency Fluctuations​

The overall external debt to GDP ratio increased, reaching 20.8 per cent as of end-March 2026, up from 19.8 per cent in March 2025. The sheer scale of the increase is notable, however, as a valuation effect due to the appreciation of the US dollar vis-à-vis the Indian rupee and other major currencies amounted to US$ 24.6 billion. Excluding this valuation effect, the external debt would have increased by US$ 51.0 billion over the previous year.

Looking at long-term commitments, which are defined as debts with an original maturity of above one year, the figure stands at US$ 613.5 billion. This represents an increase of US$ 11.6 billion from March 2025 figures. The stability and management of these long-term instruments remain central to India's financial planning.

Analyzing the Composition of External Debt​

The structure of external debt showed notable shifts, particularly concerning short-term obligations. The share of short-term debt (with original maturity of up to one year) within the total external debt increased to 19.6 per cent at March 2026, up from 18.3 per cent in March 2025.

Furthermore, the ratio of short-term debt (original maturity) to foreign exchange reserves rose to 21.6 per cent by end-March 2026, compared to 20.1 per cent in March 2025. Debts denominated in US dollars remain the dominant component, accounting for a substantial 55.5 per cent of the total external debt.

Other currency exposures include debts denominated in the Indian rupee (29.4 per cent), yen (6.4 per cent), SDR 2 (4.3 per cent), and euro (3.7 per cent).

Sectoral Breakdown and Instrument Evolution​

The sectoral distribution of debt provided insight into who is financing this growth. Non-financial corporations held the highest share at 36.4 per cent of total external debt, followed by deposit-taking corporations (except the central bank) at 26.5 per cent. The general government’s share stood at 22.0 per cent.

Regarding the instruments used for borrowing, loans constituted the largest component of external debt with a share of 34.7 per cent. This is followed by currency and deposits (22.3 per cent), trade credit and advances (19.0 per cent), and debt securities (16.1 per cent).

Debt Serviceability and Indicator Review​

A critical measure assessed in the latest release is the Debt service ratio, which refers to principal repayments and interest payments. This service requirement declined to 5.8 per cent of current receipts at end-March 2026. This figure showed improvement from the 6.6 per cent recorded in March 2025.

In terms of residual maturity, short-term debt (residual maturity) constituted 42.9 per cent of total external debt at end-March 2026. Concurrently, this percentage stood at 47.3 per cent of foreign exchange reserves. The stability in the overall financial position is further underscored by the observation that outstanding debt of the general government decreased, while non-government debt increased over the last year.