Overseas borrowing binge can cost Indian companies dear: Indian companies raised $17.2 billion through 43 overseas securities issues between April and October 2026, more than three times the $5.1 billion raised in all of the previous financial year. The seven-month tally already exceeds every full-year total since 2019–20, according to a November 10 analysis of Prime Database figures by Business Standard. Straight debt accounted for $17.1 billion, with convertible securities making up the balance. The figures cover securities issues, one part of the broader market for foreign borrowing.
Overseas markets give companies access to a larger pool of capital and, in some cases, lower rates or longer maturities than they can secure at home. The interest rate is only part of the price. A company that borrows in dollars and earns in rupees may discover how much it has committed to pay only when the rupee falls or the loan comes up for renewal.
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Where foreign borrowing makes sense
Borrowing abroad reduces dependence on domestic banks and bond markets when credit tightens at home. Longer maturities can be particularly valuable for infrastructure and manufacturing projects that take years to generate enough cash to repay their lenders.
The Reserve Bank of India added an incentive on June 8 with a concessional dollar-rupee swap facility for eligible external commercial borrowings (ECBs) by public sector undertakings and eligible overseas foreign currency borrowings by banks. On September 21, the RBI reported $5.3 billion in ECB inflows under the facility. The two borrowing windows run through December 31, 2026. The RBI’s inflow figure and Prime Database’s securities tally cover different sets of transactions.
For an exporter with predictable dollar receipts, dollar debt can make sense even without a special facility. The company can use those receipts to service the loan, provided enough dollars come in when payments fall due. An importer that pays suppliers in dollars and sells mainly in rupees is in a different position. A dollar loan can finance the purchases, but the company still needs to buy dollars to repay it.
What a dollar loan costs in rupees
When the rupee weakens, a company with unhedged dollar debt needs more rupees to make the same payment. Its domestic revenue may barely move. A loan that looked cheaper when it was signed can then cost more than the rupee loan the company turned down.
Forward contracts and currency swaps can make payments more predictable. Their terms depend in part on interest-rate differences between currencies and on how long the company needs protection. A fair comparison puts the hedged cost of the foreign loan, including fees and applicable taxes, alongside the cost of a rupee loan of comparable maturity. If the hedge expires before the loan does, the company must allow for what it could cost to renew that protection.
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The exposure also concerns domestic lenders. A company spending more rupees to service its foreign debt has less cash to pay its Indian banks. The RBI’s credit risk directions require commercial banks to assess and monitor borrowers’ unhedged foreign currency exposure and hold provisions or capital as required.
When overseas lenders stop rolling over loans
The Asian financial crisis of 1997–98 showed what can happen when exchange rates and access to credit turn against borrowers together. In Thailand, Indonesia and South Korea, private-sector borrowers had taken on substantial foreign currency debt. Depreciation raised the local-currency cost of servicing it just as overseas lenders grew reluctant to roll over short-term loans. Borrowers that had counted on renewing their debts suddenly had to find the cash to repay them.
An Indian company considering a dollar loan should test whether it could still pay if the rupee fell by 5%, 10% or 15%. The more revealing test combines a weaker rupee with higher global rates or a delay in refinancing. For a project with a long construction period, matching the maturity to the date at which the project can reasonably generate cash may be worth paying a higher rate.
The RBI’s ECB framework sets the terms under which companies can borrow. Boards still have to decide how much currency exposure the business can carry. That requires looking across subsidiaries and checking whether expected foreign currency receipts will cover payments as they fall due.
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Overseas borrowing: Debt comes due before some projects pay off
There were no equity issues in the April–October overseas tally. Equity dilutes existing shareholders, and the terms available overseas may be unattractive. Its advantage is that it carries no fixed repayment schedule. That can be worth the dilution when a project has a long gestation period and its eventual earnings are hard to predict.
India’s infrastructure and manufacturers can put foreign capital to productive use. The harder decision is how much of it to take on as debt. A plant can be worth building and still take longer than expected to earn its first rupee. The repayment date is fixed when the loan is signed.