India Inc reduced overseas bond issues on local liquidity, rupee fall

Indian corporates sharply reduced overseas bond issuances in FY26 even as domestic debt markets remained resilient, reflecting a clear pivot toward local funding amid elevated global interest rates and currency volatility. Last fiscal, the rupee lost nearly 10%-the most in 14 years.

Data from Cbonds, a financial data provider, showed offshore bond fundraising fell to $8.1 billion in FY26, down from $13.9 billion a year earlier, a nearly 40% decline. In contrast, domestic bond issuances held steady at ₹12.32 lakh crore during April-February FY26, compared with ₹12.97 lakh crore in FY25.

“Offshore borrowing has come down largely due to geopolitical uncertainty and volatility,” said Utsav Johri, partner, JSA Advocates & Solicitors. “While the recent relaxations in ECB guidelines make the market look promising and could drive a pickup later in the year once conditions stabilise, issuers are currently holding back. Hedging costs are elevated and expose borrowers to currency risk, and with ample liquidity available in the domestic market, companies are not keen to tap offshore markets at this stage.”
The Reserve Bank of India (RBI) recently relaxed norms for external commercial borrowings (ECB), raising limits to $1 billion, easing maturity requirements and removing caps on borrowing costs. The changes are aimed at making offshore funding more accessible and cost-effective.

Last fiscal, abundant liquidity in the domestic market and relatively attractive borrowing costs encouraged companies to stay onshore. “Rates in the local market were in the 7-8% range, and there was ample liquidity. That reduced the need to tap offshore markets,” a senior banker said.

The trend was also due to currency pressures. The rupee weakened amid global uncertainties, including tariff-related disruptions, making unhedged foreign currency exposure riskier. As a result, several corporates opted to refinance existing dollar liabilities through rupee bonds.Large issuers such as Greenko and Vedanta have already tapped domestic markets to refinance foreign currency debt, showing a shift toward local borrowing.

This trend is likely to persist in the near term.

“There is not a very active offshore pipeline right now. Companies are holding back on large commitments and closely watching global developments, including geopolitical risks and their impact on costs and growth,” another banker said.

Issuance activity in offshore markets has also become more selective, largely confined to investment-grade borrowers, while high-yield issuers face tighter conditions. Some diversification into alternative markets has emerged, with companies exploring currencies such as yen, though such issuances are limited.

If global conditions stabilise, issuers with upcoming maturities, particularly large public sector borrowers, could return to overseas markets to refinance debt, bankers said.