India's external debt rises to US$778.2 billion by the end of June 2026

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India's external debt in 2026

Highlights

India's total external debt reached US$778.2 billion by the end of June 2026, including US$624.7 billion in long-term debt.
The ratio of total external debt to foreign exchange reserves stood at 85.9%, while the short-term debt-to-reserves ratio was 23.0%.
US dollar-denominated debt accounted for 54.8% of total debt, while non-financial corporations maintained the largest share at 36.1%.

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June 2026 debt figures and composition

As reported by the Reserve Bank of India, India's external debt level rose by the end of June 2026, and revised data for preceding quarters were also released. Amid fluctuations in major currencies such as the yen and euro against the US dollar, valuation gains amounted to US$0.9 billion; excluding this effect, external debt would have increased by US$16.4 billion.

Long-term debt, with an original maturity of more than one year, reached US$624.7 billion by the end of June 2026, US$11.2 billion higher than at the end of March 2026. Short-term debt's share of total external debt rose to 19.7%, from 19.6% at the end of March 2026.

Short-term debt by residual maturity, which also includes long-term obligations due over the next 12 months, accounted for 43.4% of total external debt. This stood at 50.5% of foreign exchange reserves, up from 47.3% at the end of March 2026.

In terms of currency composition, US dollar-denominated debt remained the largest component at 54.8%, followed by the Indian rupee at 29.8%, the yen at 6.9%, SDR at 4.1%, and the euro at 3.5%.

Sectoral shares and impact on financial indicators

Outstanding debt in both the government and non-government sectors increased by the end of June 2026 from March 2026 levels. Non-financial corporations held the largest share of total external debt at 36.1%, followed by deposit-taking corporations excluding the central bank at 26.2%, general government at 22.4%, and other financial corporations at 10.2%.

By instrument, loans remained the largest component of debt, accounting for 34.3%. This was followed by currency and deposits at 22.2%, trade credit and advances at 19.1%, and debt securities at 16.5%.

The debt service ratio, which includes principal and interest payments, remained stable at 5.6% of current receipts by the end of June 2026, unchanged from the end of March 2026. However, the ratio of total external debt to foreign exchange reserves stood at 85.9%, while the ratio of short-term debt to reserves rose to 23.0%, highlighting the need to monitor the near-term vulnerability of external liabilities.

Our previous report discussed global central banks' rate hikes and the impact of exiting ultra-loose monetary policy, which could raise the cost of capital and make foreign investors more selective. It noted that upward pressure on the dollar and global bond yields could also affect the rupee, domestic funding costs, and Indian G-sec yields, making factors such as external stability and debt dynamics more important.

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