India’s external debt rises 10% in FY25; govt terms current position as ‘modest‘
Commercial lenders were the largest creditors, accounting for 39.6% of the total external debt outstanding at the end of March 2025, followed by NRI depositors (22.4%).
India’s external debt rose over 10 per cent to over $730 billion at the end of Fiscal Year 2024-25, Finance Ministry has reported. Even though the debt to GDP ratio has gone up by 60 basis points, a strong foreign exchange reserve is providing comfort. Also, government terms current debt position as ‘modest’.
Total external debt at the end of FY 2023-24 was over $660 billion.
“From a cross-country perspective, India’s external debt is modest. In terms of various debt vulnerability indicators, India’s sustainability is better than that of the Low and Middle-Income Countries (LMICs) as a group and vis-à-vis many of them individually,” the Ministry said in its annual report on external debt. Valuation effect due to the appreciation of the US Dollar vis-à-vis the Indian Rupee and other currencies amounted to $5.3 billion.
According to the report, the external debt vulnerability indicators continue to be benign. As of the end of March 2025, the external debt to GDP ratio was 19.1 per cent. Additionally, the foreign exchange reserves to external debt ratio stood at 90.8 per cent at the same date. “The debt service payment obligations arising out of the stock of external debt as at end-March 2025 are projected to broadly trend downwards over the coming years,” it said.
Excluding the valuation effect, external debt would have increased by $72.9 billion instead of $67.5 billion at end of March 2025 over end of March 2024. Thus, “a strong US dollar also contributed to the movements in the external debt level as of end-March 2025,” it said.
In terms of maturity, the long-term external debt constituted 81.7 per cent of the total, while the remaining 18.3 per cent was of short-term maturity. Within short-term debt, trade credit for financing imports accounted for 96.8 per cent of the total short-term debt, underscoring the stability aspect of the debt. The largest borrowers at end-March 2025 were non-financial corporations, with an outstanding external debt of $261.7 billion. The access to foreign debt was primarily through loans, accounting for 34.0 per cent, followed by currency and deposits (22.8 per cent), trade credits (17.8 per cent) and debt securities (17.7 per cent).
Commercial lenders were the largest creditors, accounting for 39.6 per cent of the total external debt outstanding at the end of March 2025, followed by NRI depositors (22.4 per cent). In terms of the denomination of external debt, the US Dollar continued to be the largest component of India’s external debt, with a share of 54.2 per cent at end-March 2025. Indian Rupee external debt occupied second place after US Dollar external debt at end-March 2025, with the share of 31.1 per cent in total external debt, followed by yen (6.2 per cent), SDR (4.6 per cent) and euro (3.2 per cent). The ratio of concessional debt in total external debt outstanding contracted to 6.9 per cent at end-March 2025 from 7.4 per cent at end-March 2024.
In Rupee terms, the stock of external debt was estimated at ₹63 lakh crore at end-March 2025 registering an increase of ₹7.3 lakh crore (13 per cent) over its level at end-March 2024.
Published on September 10, 2025
