India’s external financial health improves marginally in Q1 FY27 amid global headwinds

Kolkata: India’s external financial health improved marginally at the end of the first quarter of the fiscal amid global headwinds, data from Reserve Bank of India showed.

The country’s external debt to GDP ratio moderated to 20.8% from 20.9% three months prior even as the debt rose $15.4 billion in the first quarter of the fiscal to $778.2 billion at the end of June.

The gap between India’s international liabilities and international assets, although widened $220 billion at the end of June from $204 billion three months prior, moderated over a one year period from $313 billion, according to central bank data released Wednesday.


The long-term debt with original maturity of above one year stood at $624.7 billion, recording an increase of $11.2 billion over its level at end-March 2026.

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 8.1%.

In terms of currency composition, the US dollar-denominated debt contributed the most to India's external liability with a 54.8% share, followed by rupee-denominated debt with 29.8% share. The balance is in other global currencies like yen and euro and in special drawing rights.

Valuation gains due to the appreciation of the US dollar against other major currencies such as yen and euro amounted to $0.9 billion. Excluding the valuation effect, external debt would have increased by $16.4 billion instead of US$ 15.4 billion, RBI data showed.

At the micro level, net claims of non-residents from India -- that measures the financial gap between foreign-owned assets in India and Indian-owned assets abroad -- rose by $16.5 billion in the first quarter to $220.3 billion as at end-June 2026. This is largely on account of an increase in external liabilities by $11.6 billion and a dip of $4.9 billion in the foreign-owned assets.

Foreign liabilities of Indian residents also rose, mainly on account of increased direct investment of $15.7 billion and other investments of $4.2 billion compensating for the decline in portfolio equity investments of $14 billion).

Meanwhile, invisible receipts, which denote 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, India earned $35.5 billion in August through exports against import payment of $18.9 billion.