India's Corporate Foreign Borrowing Plummets 51% Amid High Costs
High costs pull India Inc's foreign borrowing down 51%
The Economic Times
Image: The Economic Times
In March 2026, Indian corporations borrowed only $5.43 billion, a 51% drop from the previous year, due to high interest rates, a weakening rupee, and increased hedging costs. The total external borrowings for FY26 fell to $42.87 billion, reflecting a broader trend of reduced overseas borrowing amid global financial uncertainties.
- 01Indian corporate foreign borrowings fell to $5.43 billion in March 2026, down 51% from March 2025.
- 02Total external commercial borrowings (ECBs) and foreign currency convertible bonds (FCCBs) dropped 30% to $42.87 billion in FY26.
- 03The Indian rupee lost nearly 10% of its value against the US dollar, impacting borrowing decisions.
- 04High domestic borrowing rates of 6.5% to 7% made local loans more attractive compared to overseas options.
- 05Geopolitical tensions, particularly the Iran war, contributed to the decline in foreign borrowing.
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In March 2026, Indian corporates faced a significant decline in foreign currency borrowings, amounting to $5.43 billion, a 51% decrease compared to $11.04 billion in March 2025. This downturn is attributed to high interest rates, a depreciating rupee, and rising hedging costs, which discouraged companies from seeking overseas loans. The total for external commercial borrowings (ECBs) and foreign currency convertible bonds (FCCBs) for the fiscal year 2026 fell to $42.87 billion, down 30% from $60.93 billion in FY25. The rupee ended FY26 as the weakest currency in Asia, depreciating from ₹85.59 to ₹94.83 against the US dollar, further complicating the borrowing landscape. Amidst these challenges, Indian companies opted to borrow domestically, where rates were more favorable. Notably, the Adani Group and several non-banking financial companies (NBFCs) were among the largest borrowers in March 2026, despite the overall decline in foreign borrowing.
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The decline in foreign borrowings could lead to higher domestic borrowing costs for companies, affecting their financing options and potentially impacting investment and growth.
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