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Economy · 2 stories · About 2 minutesPublished 8:18 am IST

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  1. 08EconomyIndia's external debt reaches $778.2 billion as debt-to-GDP ratio moderates to 20.8%Despite nominal debt growth, India's debt-to-GDP ratio improved slightly to 20.8% and its debt service ratio held steady at 5.6% of current receipts.
  2. 12EconomyET Government reports: India's HSBC manufacturing PMI rose to 55.1 in September, a seven-month highThe acceleration marks a sharp turnaround from August's softer reading, pointing to renewed industrial momentum.

India's external debt reaches $778.2 billion as debt-to-GDP ratio moderates to 20.8%

A container ship being loaded with cargo at a large shipping port terminal.
A container ship being loaded with cargo at a large shipping port terminal. · Murray Foubister / Wikimedia CommonsCC BY-SA 2.0

What happened

India’s external debt rose by $15.4 billion between March and June 2026 to reach $778.2 billion, according to the Reserve Bank of India. US dollar appreciation generated a $0.9 billion valuation gain, without which debt would have grown by $16.4 billion. Long-term obligations increased to $624.7 billion, while short-term debt by original maturity expanded to $153.5 billion, representing 19.7% of total debt.

Why it matters

Despite nominal debt growth, India's debt-to-GDP ratio improved slightly to 20.8% and its debt service ratio held steady at 5.6% of current receipts. However, short-term debt on a residual maturity basis—obligations due within 12 months—rose to 50.5% of foreign exchange reserves from 47.3% at end-March 2026, tightening the short-term coverage cushion.

Bigger picture

Non-financial corporations remain the largest borrower group at 36.1% ($281.2 billion) of obligations, with government debt at 22.4% ($174.3 billion). By instrument, loans represent 34.3% of obligations. The debt portfolio remains concentrated in US dollars at 54.8%, while rupee-denominated debt stands at 29.8%, Yen at 6.9%, and Euro at 3.5%.

Watch next

Watch upcoming Reserve Bank of India quarterly debt updates for potential shifts in short-term residual debt relative to foreign exchange reserves and changes in corporate foreign currency borrowing.

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ET Government reports: India's HSBC manufacturing PMI rose to 55.1 in September, a seven-month high

What happened

According to ET Government, the seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index rose by more than two index points to 55.1 in September from 52.8 in August. The print signals the sector's strongest operational improvement in seven months, supported by strong demand.

Why it matters

The acceleration marks a sharp turnaround from August's softer reading, pointing to renewed industrial momentum. However, full analysis of the turnaround remains constrained until detailed sub-index breakdowns for output, hiring, and input costs are released.

Bigger picture

A PMI reading above 50 indicates expansion. The jump back to 55.1 highlights underlying resilience in India's industrial sector, maintaining a sustained period of growth despite global economic headwinds.

Watch next

Watch for detailed breakdown data on new export orders, employment, and input inflation to evaluate the longevity of the manufacturing rebound.

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