India's external financial position showed significant improvement during the January-March quarter of FY2025-26. According to the latest data released by the Reserve Bank of India (RBI) on Tuesday, net claims of non-residents on India declined by US$ 52.4 billion to US$ 209.9 billion at the end of March 2026. This improvement was primarily driven by a US$ 40.1 billion decline in foreign-owned assets in India and a US$ 12.3 billion increase in Indian residents overseas financial assets. The RBI noted that exchange rate movements, particularly the depreciation of the rupee against major currencies, also influenced the valuation of external liabilities in US dollar terms during this period. The improvement was largely due to rupee depreciation against the US dollar, and a US$ 76.4 billion increase in Indian residents' overseas financial assets, with the ratio of India's international financial assets to international financial liabilities rising to 85.2 per cent in March 2026 from 82 per cent at the end of December 2025.
For the full financial year FY2025-26, the external financial position showed even more substantial improvements. As reported by the RBI, net claims of non-residents fell by US$ 119.2 billion, reflecting a US$ 42.8 billion decline in external financial liabilities and a US$ 76.4 billion increase in India's overseas financial assets. The annual increase in overseas financial assets was primarily driven by higher overseas direct investment and reserve assets, while lower portfolio and direct investment by non-residents reduced India's external liabilities. The RBI explained that foreign liabilities declined mainly due to a fall in portfolio investment and direct investment in India, while inward foreign direct investment increased in rupee terms, but its value declined in US dollar terms because of exchange rate depreciation. The ratio of net claims of non-residents to GDP improved to (-)5.9 per cent from (-)9.0 per cent in March 2025, indicating a stronger external position.
India's international financial position has strengthened significantly across key metrics. According to the RBI data, the ratio of India's international financial assets to international financial liabilities rose to 85.2 per cent in March 2026 from 77.5 per cent a year earlier, reflecting a strengthening of the country's external balance sheet. Reserve assets continued to dominate India's international financial assets, accounting for 57.1 per cent of the total, while overseas direct investment contributed around one-fourth. On the assets side, overseas direct investment accounted for more than 60 per cent of the increase in Indian residents' overseas financial assets during the quarter, followed by reserve assets. The ratio of net claims of non-residents to GDP improved to (-)5.9 per cent from (-)9.0 per cent in March 2025, indicating a stronger external position, though the share of debt liabilities in India's total external liabilities continued to rise, reaching 56.6 per cent at the end of March 2026.
India's external financial position has been further strengthened by robust remittance inflows, with remittances growing 17.6% to a record $35.34 billion in FY2025-26. As reported by the RBI, this growth was primarily driven by higher overseas direct investment and reserve assets, while lower portfolio and direct investment by non-residents reduced India's external liabilities. The sustained growth in remittances reflects the increased compliance measures that encouraged non-resident Indians (NRIs) to send their earnings through formal channels, along with stable exchange rates and streamlined banking channels. This remittance growth, combined with the overall improvement in India's external financial position, demonstrates the country's strengthening external balance sheet and improved financial stability.
