India External Debt Reaches USD 778.2 Billion in June Quarter While Debt-to-GDP Moderates to 20.8%

India's external debt rose to USD 778.2 billion at the end of June 2026, marking an increase of USD 15.4 billion from USD 762.8 billion recorded at the end of March 2026, according to official data released by the Reserve Bank of India (RBI).

Despite the expansion in the headline debt stock, India's external debt-to-GDP ratio eased marginally to 20.8% at the end of June 2026 from 20.9% at the end of March 2026, reflecting the continued growth pace of the broader domestic economy. Valuation gains resulting from the appreciation of the US dollar against major currencies such as the Japanese yen and the euro stood at USD 0.9 billion; excluding this valuation impact, the debt would have expanded by USD 16.4 billion.

Key Maturity and Reserve Metrics

Long-term debt with an original maturity exceeding one year stood at USD 624.7 billion, up by USD 11.2 billion from the end-March 2026 figure. Meanwhile, short-term debt by original maturity comprised 19.7% of total external debt, compared to 19.6% three months prior.

A closer examination of the debt's maturity profile reveals:

• Short-Term Debt by Original Maturity: The ratio of short-term debt to foreign exchange reserves stood at 23.0% at the end of June 2026.
• Residual Maturity Obligations: Debt obligations falling due over the next twelve months—comprising short-term borrowings and long-term liabilities maturing within a year—accounted for 43.4% of total external debt.
• Forex Reserve Coverage: Residual short-term obligations climbed to 50.5% of foreign exchange reserves, compared to 47.3% at the end of March 2026. Total external debt stood at 85.9% of foreign exchange reserves.
• Debt Servicing Ratio: The country's debt service ratio, measured by repayments of principal and interest relative to current receipts, remained unchanged at 5.6%.

Sectoral Breakdown and Currency Profile

Non-financial corporations continued to hold the largest share of India's external obligations, accounting for 36.1% of total external debt. Deposit-taking financial institutions and commercial banks followed with a 26.2% share, while general government liabilities accounted for 22.4%. In absolute terms, non-government debt stood at USD 603.9 billion, while government external debt was recorded at USD 174.3 billion.

Commercial loans remained the predominant instrument of external funding, followed by non-resident foreign currency deposits, trade credits, and debt securities.

In terms of currency denomination, US dollar-backed debt maintained the largest share at 54.8%, followed by Indian rupee-denominated debt at 29.8%. The remaining liabilities were denominated in Japanese yen (6.9%), Special Drawing Rights (4.1%), and the euro (3.5%).

Implications for Indian Markets

For Indian equity and fixed-income markets, the stable debt-to-GDP ratio and comfortable foreign exchange reserve coverage provide reassurance regarding India's external sector resilience. Although upcoming 12-month repayments represent a slightly larger portion of forex buffers, the stable debt service ratio of 5.6% underscores manageable external liability pressures for the Reserve Bank of India and corporate issuers tapping overseas debt markets.

Tags: Reserve Bank of India Indian Rupee Ministry of Finance External Commercial Borrowings Macroeconomy