India's external debt increased by $15.4 billion to $778.2 billion at the end of June 2026, according to Reserve Bank of India data. The debt-to-GDP ratio moderated to 20.8% from 20.9% in the previous quarter, showing marginal improvement despite the absolute increase in debt levels. Net international liabilities rose to $220.3 billion but remained below year-ago levels, indicating some stabilization in the country's external financial position. The RBI data also revealed that 50.5% of India's foreign exchange reserves are now tied up in debt obligations due for repayment within the next 12 months, up from 47.3% three months earlier. The asset-to-liability coverage ratio moderated to 84.6% in June 2026 from 85.7% a quarter ago, reflecting the expansion in foreign liabilities.
Loans remained the largest component of external debt with a 34.3% share, followed by currency and deposits at 22.2%, trade credit and advances at 19.1%, debt securities at 16.5%, and others at 8.1%. In terms of currency composition, US dollar-denominated debt contributed the most with a 54.8% share, followed by rupee-denominated debt at 29.8%. Long-term debt with original maturity above one year stood at $624.7 billion, recording an increase of $11.2 billion over the end-March 2026 level. Government external debt rose to $174.3 billion, while non-government debt stood at $603.9 billion. Companies outside the financial sector continued to account for the largest share at 36.1%, followed by banks and other deposit-taking institutions at 26.2% and the government at 22.4%.
Valuation gains due to US dollar appreciation against major currencies like yen and euro amounted to $0.9 billion. Excluding this valuation effect, external debt would have increased by $16.4 billion instead of the reported $15.4 billion. The gap between India's international liabilities and assets widened by $220 billion from $204 billion three months prior, though it remained below the $313 billion level recorded a year ago. Currency movements also reduced the increase in India's external debt during the quarter, providing some relief to the overall debt burden.
Net claims of non-residents from India rose by $16.5 billion in the first quarter to $220.3 billion as at end-June 2026. This increase was largely attributed to external liabilities rising by $11.6 billion and a decline of $4.9 billion in foreign-owned assets. Foreign liabilities of Indian residents also increased, mainly due to increased direct investment of $15.7 billion and other investments of $4.2 billion, which compensated for a decline in portfolio equity investments of $14 billion. Foreign direct investment liabilities rose to $560.9 billion from $545.2 billion in March 2026, while portfolio equity investments dropped from $109.3 billion to $95.3 billion. Portfolio debt securities increased from $123.0 billion to $128.7 billion.
Invisible receipts, which include foreign exchange earnings from intangible services, investments and remittances, rose to $163 billion for the first quarter against $144 billion in the year-ago period. On the services trade front, India earned $35.5 billion in August through exports against import payments of $18.9 billion, demonstrating the country's continued strength in services trade despite global headwinds. Debt servicing, which includes repayment of principal and interest, remained unchanged at 5.6% of current receipts. The share of debt liabilities in total external liabilities increased gradually to 56.9% as of end-June 2026, while non-debt liabilities settled at 43.1%, down from 43.4% in March 2026.
