India’s net external liabilities declined sharply by 52.4 billion US dollar during the January-March quarter of 2025-26 to 209.9 billion US dollar at the end of March, reflecting a fall in foreign-owned assets in the country and a rise in overseas financial assets held by Indian residents. According to Reserve Bank data released today, the decline in net claims of non-residents on India was driven by a 40.1 billion dollar fall in foreign liabilities and a 12.3 billion dollar increase in Indian residents’ overseas financial assets during the fourth quarter of FY26. Exchange rate movements also contributed to the decline in liabilities when measured in dollar terms.
Foreign liabilities declined mainly due to lower portfolio investment and direct investment in India, as the depreciation of the rupee against major currencies reduced the US dollar value of inward investments despite an increase in FDI in rupee terms. Meanwhile, overseas direct investment accounted for more than 60 percent of the increase in India’s external financial assets during the quarter, followed by reserve assets.
The RBI said India’s international financial assets rose to 1,210.4 billion US dollar at the end of March from 1,198.1 billion dollar three months earlier, while external liabilities declined to 1,420.3 billion dollar from 1,460.4 billion dollar, improving the assets-to-liabilities ratio to 85.2 percent from 82 percent.
For the full financial year 2025-26, the RBI said net claims of non-residents on India fell by USD 119.2 billion as overseas financial assets of Indian residents increased by USD 76.4 billion while external liabilities declined by USD 42.8 billion. As a result, the ratio of net claims of non-residents to GDP improved to (-)5.9 per cent in March 2026 from (-)9 per cent a year earlier.
The central bank also noted that reserve assets accounted for 57.1 per cent of India’s international financial assets at end-March, while the share of debt liabilities in total external liabilities increased to 56.6 per cent from 55.3 per cent in the previous quarter.
