India’s external debt is 18.9% of GDP. This means that for every Rs. 100 the Indian economy produces, about Rs. 19 is owed to foreign lenders.
MUMBAI (India CSR): The Reserve Bank of India (RBI) today released provisional data indicating a substantial rise in India’s total external debt, reaching US$747.2 billion (6,201,760 Crore Rs.) as of the end of June 2025. This marks an increase of US$11.2 billion (equivalent to approximately 92,960 Crore Rs.) over the debt level recorded at end-March 2025 (US$ 735.9 billion).
Key Indicators and Valuation Effects
The report highlights that the increase in debt included a considerable impact from exchange rate fluctuations.
• Valuation Loss: A valuation loss of US$ 5.1 billion [42,330 Crore Rs.] was recorded due to the depreciation of the US dollar vis-à-vis the Indian rupee and other major currencies such as the yen, the euro, and SDR.
• Flow-Based Increase: Excluding this valuation effect, the actual increase in external debt due to new borrowings and flows was lower, estimated at US$6.2 billion [51,460 Crore Rs.] instead of the reported US$ 11.2 billion [92,960 Crore Rs.] increase.
Despite the absolute increase in debt, the external debt to GDP ratio moderated to 18.9 per cent at end-June 2025, down from 19.1 per cent at end-March 2025. The Debt Service Ratio (principal and interest payments as a percentage of current receipts) remained unchanged at 6.6 per cent at end-June 2025 compared to end-March 2025.
India’s foreign exchange reserves provided strong coverage, with the Ratio of Foreign Exchange Reserves to Total Debt standing at 93.4 per cent.
Key Highlights of June 2025 Debt Data
- Total External Debt: $747.2 billion.
- Increase Since March 2025: $11.2 billion.
- Debt to GDP Ratio: 18.9% (slightly down from 19.1% in March 2025).
- Long-term Debt: $611.7 billion (over 80% of total).
- Short-term Debt: $135.4 billion (about 18% of total).
- US Dollar Share: 53.8% of total debt.
- Rupee Debt: 30.6% of total debt.
- Debt Service Ratio: 6.6% (the part of export earnings used to pay interest and repayments).
Maturity Profile: Shift Towards Long-Term Stability
The debt composition shows a favorable shift towards long-term stability.
1. Long-Term Debt: Debt with an original maturity of above one year (long-term debt) reached US$611.7 billion [5,077,110 Crore Rs.]. This segment saw the largest absolute increase during the quarter, rising by US$10.3 billion [85,490 Crore Rs.] over its level at end-March 2025.
2. Short-Term Debt: The proportion of short-term debt (original maturity of up to one year) in total external debt declined to 18.1 per cent at end-June 2025, down from 18.3 per cent at end-March 2025. Short-term debt stood at US$ 135.4 billion [1,123,820 Crore Rs.].
3. Short-Term Risk Mitigation: The ratio of short-term debt (original maturity) to foreign exchange reserves also improved, decreasing to 19.4 per cent at end-June 2025 (compared to 20.1 per cent at end-March 2025).
When assessed on a residual maturity basis (which includes long-term debt falling due in the next twelve months), short-term debt totaled US$ 304.3 billion [2,525,690 Crore Rs.]. This constituted 40.7 per cent of total external debt (down from 41.3 per cent) and 43.6 per cent of foreign exchange reserves (down from 45.4 per cent).
Sectoral Contribution and Borrowing Structure
The increase in external debt was largely concentrated in the non-government sectors.
Non-Government Sector
Outstanding non-government debt increased and stood at US$579.2 billion [4,807,360 Crore Rs.].
◦ Non-financial corporations held the largest sectoral share of total external debt at 35.9 per cent, amounting to US$ 267.9 billion [2,223,570 Crore Rs.]. This segment alone saw an increase of US$ 7.0 billion [58,100 Crore Rs.] over the quarter.
◦ Deposit-taking corporations (except the central bank) held the second largest share at 27.4 per cent (US$ 204.5 billion [1,697,350 Crore Rs.]).
◦ Direct Investment: Intercompany Lending increased by US$ 0.9 billion [7,470 Crore Rs.], reaching US$ 35.8 billion [296,140 Crore Rs.].
Government Sector
The outstanding debt of the general government decreased marginally to US$ 168.0 billion [1,394,400 Crore Rs.]. This total included US$ 104.6 billion [868,180 Crore Rs.] in external assistance debt and US$ 63.3 billion [525,390 Crore Rs.] in other government external debt.
Instrument and Currency Composition
• Loans remained the largest component of external debt, constituting 34.8 per cent, with an outstanding amount of US$259.8 billion [2,156,340 Crore Rs.].
• Currency and deposits made up 23.0 per cent (US$171.7 billion [1,425,110 Crore Rs.]), followed by trade credit and advances (17.7 per cent, US$131.9 billion [1,094,770 Crore Rs.]) and debt securities (16.8 per cent, US$125.2 billion [1,039,160 Crore Rs.]).
The US dollar-denominated debt remained the largest currency component, accounting for 53.8 per cent of India’s external debt at end-June 2025. Debt denominated in the Indian rupee followed at 30.6 per cent.
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What Is External Debt?
External debt is the total money borrowed by India from foreign governments, institutions, banks, or investors. Just like a family might borrow from a bank for education or a house, India borrows to fund development projects, pay for imports, or stabilize its economy.
The debt can be short-term (to be repaid within a year) or long-term (repaid over many years). The debt is taken in different currencies like the US dollar, Indian rupee, Japanese yen, or euro.
Long-term vs. Short-term Debt
The majority of India’s debt — about 82% — is long-term. This is good because it gives India time to repay without sudden pressure.
Short-term debt, which needs to be repaid within a year, has reduced slightly to 18.1% of total debt. This reduces the risk of sudden repayment burdens if global conditions change.
When measured against India’s foreign exchange reserves, short-term debt is 19.4%, which shows the country has enough reserves to cover repayments.
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Who Owes the Debt?
The debt is spread across different sectors:
- Non-financial companies: 35.9% of total debt.
- Banks (deposit-taking corporations): 27.4%.
- Government: 22.5%.
- Other financial corporations: 9.5%.
This means Indian companies borrow more from abroad than the government itself. For common citizens, this indicates that private sector growth relies heavily on foreign money.
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Disclaimer on Rupee Conversion: As the source material provides figures exclusively in US$ billion, the equivalent figures presented in Crore Rs. throughout this report are based on an assumed conversion rate of US$ 1 = Rs. 83. This calculation is performed solely to fulfill the formatting request and is not derived from the source documents.
(India CSR)
