India’s External Debt Climbs to $762.8 Billion in FY26: RBI Explains the Rise

At the end of FY26, India’s external debt rose to $762.8 billion and it marks the increase of $26.3 billion from last year according to the latest data released by the Reserve Bank of India (RBI). The country’s external debt-to-GDP ratio has also increased from 19.8% to 20.8% and it reflecting the higher overseas borrowings during the year. As the figures shows a rise in India’s external liabilities, the RBI has noted that the currency valuation effects and changes in global financial conditions also influenced the overall debt position.

What Is External Debt?

External debt refers to the total amount of money borrowed by any country from foreign lenders, including governments, international financial institutions, commercial banks and overseas investors.

It includes the loans taken by the central government, state governments, corporations, banks and other entities that must be repaid in foreign currencies or agreed terms.

External debt is an important economic indicator because it reflects the country’s financial obligations to the rest of the world and its ability to meet future repayment commitments.

Key Data RBI’s FY26 External Debt Report

According to the RBI,

• India’s external debt stood at the $762.8 billion as of March 2026.
• External debt has also increased by the $26.3 billion compared to FY25.
• The external debt-to-GDP ratio rose to 20.8%, and it is up from 19.8% a year earlier.
• The increase was partly offset by the valuation effects due to the appreciation of the US dollar against the Indian rupee and other major currencies.

The RBI has estimated that valuation changes reduced the reported increase by the $24.6 billion. Without this adjustment, the rise in the external debt would have been around $51 billion.

Currency Composition of India’s External Debt

The US dollar continued to dominate India’s external debt portfolio.

The currency-wise composition at the end of FY26 was,

• US Dollar: 55.5%
• Indian Rupee: 29.4%
• Japanese Yen: 6.4%
• Special Drawing Rights (SDR): 4.3%
• Euro: 3.7%

Also a diversified currency mix also helps to reduce the concentration risk, although fluctuations in the exchange rates can significantly impact the repayment obligations.

Long-Term and Short-Term Debt Trends

The RBI data showed that the long-term external debt, with an original maturity of more than one year and increased to $613.5 billion and it is up by $11.6 billion from the previous year.

However, short-term external debt grew at the faster pace.

Key indicators includes the,

• Short-term debt increased to the 19.6% of total external debt from 18.3%.
• The ratio of short-term debt to foreign exchange reserves also rose from 20.1% to 21.6%.

These figures indicates that the larger share of India’s external obligations will mature within the next 12 months.

RBI Highlights Economic Stability

As per the latest RBI figures India’s external debt has increased; the overall debt profile remains diversified across the different currencies and maturities.

The central bank continues to monitor the external sector indicators and it including the debt sustainability, foreign exchange reserves and capital flows, to ensure the macroeconomic stability.

As India continues to attract the foreign investment and it expands the global trade, prudent debt management will remain essential for the maintaining investor confidence and supporting long-term economic growth.