In 2025-26 as a whole, Indian companies borrowed just under $43 billion from abroad, down 30% from $61 billion in 2024-25.
Foreign borrowings of Indian companies halved in March compared to the final month of 2024-25, with the amount borrowed from abroad in all of 2025-26 down 30% from the previous year as the rupee’s rapid weakening and rising overseas interest rates made taking on domestic debt more attractive.
According to latest Reserve Bank of India (RBI) data released on Thursday, India Inc’s external commercial borrowings (ECBs) were down 51% year-on-year in March at $5.43 billion. In March 2025, external commercial borrowings had surged to an over five-year high of $11.04 billion, powered by large deals struck by the likes of JSW Steel, JSW NEO Energy, and Tata Semiconductor Manufacturing, among others.
“The external environment today is not conducive to ECBs given the volatile nature of the currency. This may make ECBs less attractive. Besides, it does not look like that the interest rates will be lowered any further by global central banks at least in the next 3 months given the rather fragile nature of the world economy and the threat of inflation looming across countries,” Bank of Baroda economists said in a note.
Foreign borrowings typically are higher in the last month of the financial year as companies try to exhaust any available limits, said Diviay Chadha, Partner at Singhania & Co. Borrowing from abroad is usually cheaper than from Indian financial institutions. Experts also said that the increase in foreign borrowings in March could be linked to the raising of the borrowing limit by the RBI in February from $750 million to $1 billion.
“The enhancement of borrowing limits under the automatic route, relaxation of certain maturity and pricing constraints, and broadening of operational flexibility collectively signalled a more facilitative regulatory posture toward offshore borrowings,” said Tushar Kumar, a Supreme Court advocate specialising in corporate and commercial contracts.
In 2025-26 as a whole, Indian companies borrowed just under $43 billion from abroad, down 30% from $61 billion in 2024-25. These include borrowings through foreign-currency-denominated routes such as ECBs, foreign currency convertible bonds (FCCBs), and rupee-denominated bonds (RDBs). In the last two years, only February 2026 saw Indian companies raising money from abroad through rupee-denominated bonds, amounting to Rs 318 crore ($35 million).
February had seen a reversal in the country’s capital flows fortunes, with net Foreign Direct Investment recording an inflow after a gap of six months and rising to a near-four-year high of $4.62 billion after India and the US agreed to an interim trade deal that reduced the reciprocal tariff from 25% to 18% and eliminated the penal tariff of 25%. Foreign Portfolio Investors also net purchased Indian stocks and bonds, helping the rupee appreciate by 1.1% against the US dollar. However, that was before the war in West Asia began. Since then, the rupee has slumped by 5.2%.
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The Indian Express has learnt that the RBI internally discussed further relaxing external borrowing regulations and providing hedging benefits and discounts to borrowers using this route amid the ongoing West Asia war. However, these proposals did not take final shape. The RBI did not respond to a query on these discussions.
Going ahead, market participants expect the risk appetite of corporates to remain subdued as long as geopolitical uncertainties remain.
“…structurally, the environment is weak because the hedging costs are very high, so the all-in borrowing cost in India is very high. As long as there’s volatility, the hedging rates will remain high,” said Sanjay Agarwal, Senior Director at CareEdge Ratings.
Hedging is done by companies, usually via derivative contracts, to reduce losses from fluctuations in the exchange rate. When the rupee weakens, a dollar loan becomes more expensive for the Indian company to pay back as more rupees are required for each dollar.
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“…companies have lined up a lot of deals for fundraising, but then they are not going ahead (because of the uncertainties). So definitely investor appetite would be there at a certain price, but people are not biting the bullet because of the cost,” the head of treasury at a non-banking financial company said.
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