6 days ago
India’s External Borrowings Jump 74% in June on Concessions
Indian companies borrowed much more money from foreign lenders in June 2026.
They raised $6.08 billion, which was 74.4% more than in June 2025.
Borrowing was also higher than it had been in May 2026.
Experts said foreign loans looked cheaper than domestic loans in some cases.
They also said money was harder to obtain inside India at the time.
New rules in February made overseas borrowing easier.
A special Reserve Bank of India swap plan also encouraged some public-sector companies to borrow abroad.
More companies used the money for working capital, which means everyday business expenses.
An expert warned that using less money for new factories and equipment could affect long-term growth.
India’s external commercial borrowings reached $6.08 billion in June 2026, up 74.4% year over year.
June borrowing was also 28.3% higher than the $4.74 billion raised in May 2026.
Experts linked the rise to overseas cost advantages, tight domestic liquidity, and February 2026 FEMA amendments.
Public sector overseas borrowing increased 25% year over year to $1.06 billion, with four PSUs raising funds.
Working capital and general corporate needs overtook capacity expansion as prominent borrowing purposes.
- Who
- Indian companies and public sector undertakings, including Power Grid Corporation of India, Housing and Urban Development Corporation, Power Finance Corporation, and India Hydro Power Corporation, raised external commercial borrowings; Madan Sabnavis and Vivek Iyer provided analysis.
- What
- External commercial borrowings rose sharply to $6.08 billion in June 2026.
- Where
- The borrowing was raised overseas by companies operating in India.
- When
- June 2026; the figures were published on August 27, 2026. The Reserve Bank of India’s special swap mechanism began on June 8.
- Why
- Experts cited the interest-rate differential between India and foreign markets, tight domestic liquidity, February 2026 liberalization of the external commercial borrowing framework, and the Reserve Bank of India’s special swap mechanism.
Key facts
- June 2026 ECBs
- $6.08 billion
- Year-on-year increase
- 74.4%, compared with $3.48 billion in June 2025
- Month-on-month increase
- 28.3%, compared with $4.74 billion in May 2026
- PSU borrowing
- $1.06 billion in June 2026, up 25% from $0.85 billion a year earlier
- Number of borrowing PSUs
- Four in June 2026, compared with two in June 2025
- Working-capital borrowers
- 76 companies cited working capital or general corporate needs, compared with 49 in June 2025
- Capital-goods borrowers
- 19 companies borrowed for capital goods: 10 for imports and nine for local sourcing
- Cumulative PSU ECBs
- $2.59 billion on August 21, up from $1.34 billion on July 17
Quotes
Vivek Iyer
Partner at Grant Thornton Bharat
“From a long-term standpoint, ECB funds going towards working capital and not capacity creation has implications for growth in the long-run”
thehindubusinessline.com
“The general trend of the tilt away from capex has been building for the past two years”
thehindubusinessline.com
Sources
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