Foreign currency borrowing by Indian corporates dropped sharply in March, falling 51% to $5.43 billion from $11.04 billion a year earlier. RBI data points to higher interest rates, a weakening rupee, and especially rising hedging costs that made overseas loans less attractive. Even FY26 figures reflect the slowdown, with ECBs and FCCBs down 30% to $42.87 billion. Instead of borrowing at higher costs, many firms allowed annual limits to lapse.
Adani, Arcelor and other major companies including Bharti Airtel, Genpact and ZF Friedrichshafen are setting up treasury operations in India’s GIFT City. The tax-neutral finance zone is expected to deliver cheaper funding and lower taxes on dividend remittances. Seventeen corporate treasuries are slated to start within three months as India seeks to compete with Singapore and Dubai for global capital management.
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In FY26, Indian businesses are leaning more on bank lending as the dominant source of corporate funding, hitting a three-year peak in total resource mobilisation. Though foreign capital and bond markets saw activity, their scale paled compared with banks. The shift signals a notable change in how companies are financing growth, with credit markets playing a bigger role again.
Indian companies are cutting back on overseas bond issuance as domestic liquidity improves and a weaker rupee makes local borrowing more appealing. With funding costs and currency dynamics turning in favor of onshore markets, issuers are favoring local fundraising over foreign capital. The shift signals how quickly corporate debt strategies are responding to market conditions.
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