India’s external debt rose by 3.6% or $26.3 billion on a year-on-year (YoY) basis to the second-highest level of $762.8 billion at end-March 2026 (20.8% of GDP), primarily led by expansion in short-term credit and commercial borrowings – which together constituted ~59% of the overall external debt. Additionally, the share of short-term debt by original and residual maturity in total external debt worsened in the year, to 19.6% and 42.9%, respectively, in FY2026 (vs. 18.3% and 41.2% in FY2025). However, with a sequential uptick of $4.9 billion in reserve assets, the coverage of external debt by forex reserves improved to 90.8% at end-March 2026 from 89.6% at end-December 2025, while remaining lower than the average of 93.6% in H1 FY2026.

EXHIBIT: Trends in external debt and as percentage of GDP