India’s external debt hits USD 778.2 billion in June quarter
RBI data reveals India's external debt rose to USD 778.2 billion in the June quarter, even as the debt-to-GDP ratio remains stable.
India's total external debt climbed to USD 778.2 billion by the end of June 2026, according to the latest figures released by the Reserve Bank of India (RBI) on Wednesday. This marks an increase of USD 15.4 billion compared to the figures recorded at the end of March.
Stability Amidst Rising Debt Levels
While the absolute volume of debt has grown, the impact on the broader economy appears controlled. The RBI reported that the external debt-to-GDP ratio remained largely stable, actually dipping slightly to 20.8 per cent from the 20.9 per cent recorded at the end of March.
The increase in debt was observed across both sectors:
- Non-government debt: Stood at USD 603.9 billion.
- Government external debt: Rose to USD 174.3 billion.
Upcoming Repayment Obligations
A key takeaway from the RBI's data is the rising proportion of debt due for repayment in the near future. Debt obligations scheduled for repayment within the next 12 months reached 50.5 per cent of India's foreign exchange reserves at the end of June. This is an increase from the 47.3 per cent seen three months prior.
Note: This ratio indicates the scale of upcoming obligations relative to available reserves; it does not imply that half of the country's reserves will be immediately exhausted for these repayments.
Who Holds the Debt?
The composition of India's external debt shows that private entities continue to carry the heaviest burden. The breakdown of the debt share is as follows:
- Companies outside the financial sector: 36.1 per cent (the largest share).
- Banks and deposit-taking institutions: 26.2 per cent.
- Government: 22.4 per cent.
In terms of the type of borrowing, loans remain the primary method of external financing, followed by deposits, trade credit, and debt securities.
Currency Impact and Debt Servicing
The RBI highlighted that fluctuations in currency markets played a role in tempering the debt increase. Had these currency movements not occurred, the external debt would have surged by USD 16.4 billion instead of the reported USD 15.4 billion.
Regarding debt servicing—which covers both interest payments and the repayment of principal—the ratio remained steady at 5.6 per cent of current receipts.