Industry Odisha Bureau, Sep 30: India’s external debt rose $15.4 billion to $778.2 billion in the June quarter. Yet the debt-to-GDP ratio eased slightly to 20.8%. Net liabilities widened quarterly, while foreign-exchange earnings strengthened.
India owed more to the rest of the world at the end of June. Yet that debt weighed slightly less against the size of its economy. External debt climbed to $778.2 billion, RBI data showed. The external debt-to-GDP ratio still eased to 20.8% from 20.9%. The debt stock rose, while the relative burden edged lower. A 0.1-point dip is marginal, not a turnaround. It shows India’s external financial health cannot be read from one number. The picture mixes modest improvement with fresh pressure amid global headwinds.
Most debt runs long
Long-term debt, with an original maturity above one year, stood at $624.7 billion. It rose $11.2 billion from end-March 2026. That makes long-term borrowing the bulk of India’s external debt.
Loans formed the largest component, at 34.3%. Currency and deposits accounted for 22.2%, and trade credit and advances 19.1%. Debt securities made up 16.5%, with other items at 8.1%. The liabilities are therefore spread across several financing channels.
Dollar exposure dominates
US dollar-denominated debt made up 54.8% of the total. Rupee-denominated debt accounted for 29.8%. The rest spanned the yen, euro, special drawing rights and other currencies. Denomination describes the currency owed, not who the creditor is.
Currency swings also shaped the headline figure. A stronger dollar against the yen and euro produced valuation gains of $0.9 billion. These gains reduce the dollar value of debt owed in other currencies. Excluding them, external debt would have risen $16.4 billion, not $15.4 billion. Reported changes therefore do not equal fresh borrowing.
A gap that widened, then narrowed
India’s international investment position tells a similar two-sided story. Net claims of non-residents on India reached $220.3 billion at end-June 2026. The gap widened by $16.5 billion from about $204 billion in March. Over a year, however, it narrowed from around $313 billion. Quarterly deterioration and annual improvement are both part of the record.
External liabilities rose $11.6 billion during the quarter. Foreign assets held abroad by Indian residents fell $4.9 billion. Together, these moves widened the net gap.
Capital flows pull apart
Direct investment rose $15.7 billion, and other investment climbed $4.2 billion. Portfolio equity investment fell $14 billion, partly offsetting those gains. Direct investment and portfolio equity are distinct flows, and they moved in opposite directions.
Earnings provide a counterweight
Foreign-exchange earnings offer a firmer signal. Invisible receipts rose to $163 billion in the first quarter. That compares with $144 billion a year earlier. These receipts cover services, investment income and remittances, not just services exports.
In August, India earned $35.5 billion from services exports. Services import payments totalled $18.9 billion. That implies a services surplus of about $16.6 billion, derived from those figures. The August numbers cover a different period from the quarterly data.
An external balance in two directions
India’s external balance sheet is moving in two directions. Debt grew in absolute terms, yet its GDP burden edged lower. Net liabilities widened over the quarter but improved sharply over the year. Stronger invisible earnings add a cushion beyond merchandise trade. Read together, these indicators point to marginal improvement, not a clean bill of health.
