Executive Summary:
This document addresses India's forex reserve levels in response to questions raised in Lok Sabha. It details the performance of service exports, diversification of forex reserves, measures to strengthen service exports and remittances, contingency measures, and considerations for leveraging reserves for green energy investments. The data on forex reserves is current as of July 11, 2025.
Key Points / Main Content:
* **Service Exports:**
* Net service exports increased from USD 143.3 billion in 2022-23 to USD 188.8 billion in 2024-25.
* Service exports contribute to moderating the current account deficit and increasing foreign exchange reserves.
* **Diversification of Forex Reserves:**
* The RBI Act, 1934, provides the legal framework for deploying reserves in foreign currency assets and gold.
* Foreign currency assets are held in multi-asset portfolios following international best practices.
* A small portion of reserves is managed by external asset managers, governed by the RBI Act, 1934.
* **Strengthening Service Exports and Remittances:**
* The government is negotiating market access through trade agreements.
* Trade promotion is conducted through national fairs and exhibitions.
* Domestic sectoral challenges are addressed through stakeholder consultations.
* Inward remittances are facilitated by enhancing convenience, speed, and transparency.
* RBI allows Money Transfer Operators (MTOs) to offer digital products with banks.
* Efforts are made to enhance cross-border payments via UPI interlinking and participation in Project Nexus.
* **Contingency Measures:**
* India's forex reserves stood at USD 668.3 billion as of March 2025, providing about 11 months of import cover and covering 90.8% of outstanding external debt.
* Forex reserves were USD 696.7 billion as of July 11, 2025.
* RBI has taken measures to enhance foreign exchange inflows, including removing investment limits for FPIs and introducing Special Non-Resident Rupee accounts.
* **Leveraging Reserves for Investments:**
* Forex reserves are invested with the objective of safety, liquidity, and returns.
* Investments are made in approved sovereign and sovereign-guaranteed investments only.
Impact Analysis:
* **Government of India:**
* Impact: Responsible for implementing policies to boost service exports, manage forex reserves, and ensure economic stability.
* Action Required: Continue to pursue trade agreements, address sectoral challenges, and monitor the impact of policies on forex reserves.
* **Reserve Bank of India (RBI):**
* Impact: Manages forex reserves, regulates investments, and facilitates cross-border transactions.
* Action Required: Adhere to the RBI Act, 1934, diversify reserves, and enhance measures for foreign exchange inflows.
* **Exporters and Service Providers:**
* Impact: Benefit from government initiatives to boost service exports and enhanced cross-border payment systems.
* Action Required: Participate in trade fairs and exhibitions, address sectoral challenges, and leverage digital payment infrastructure.
* **Investors (FPIs):**
* Impact: Subject to revised investment limits and regulations for corporate debt.
* Action Required: Comply with updated regulations for FPI investments in corporate debt.
* **Non-Residents with Business Interests in India:**
* Impact: Facilitated with Special Non-Resident Rupee accounts for cross-border transactions.
* Action Required: Utilize Special Non-Resident Rupee accounts for simplified cross-border transactions.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for managing the country's monetary policy and foreign exchange reserves.
RBI Act, 1934: The legislation that provides the legal framework for the deployment of India's foreign exchange reserves.
Special Drawing Rights: An international reserve asset created by the International Monetary Fund (IMF) to supplement the official reserves of its member countries.
Unified Payments Interface: An instant real-time payment system developed by National Payments Corporation of India (NPCI) facilitating inter-bank transactions.
ASEAN Nations: Association of Southeast Asian Nations, a regional intergovernmental organization comprising ten Southeast Asian countries.
Malaysia: A country in Southeast Asia.
Philippines: A country in Southeast Asia.
Thailand: A country in Southeast Asia.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO. 1269
TO BE ANSWERED ON 28.07.2025
INDIA'S FOREX RESERVE LEVEL
1269. Shri Arun Bharti:
Will the Minister of FINANCE be pleased to state:
(a) the details of the strong performance in service exports for reducing the current account deficit and
supporting India’s forex reserve levels;
(b) the measures being implemented by the Government to diversify India’s forex reserves, including
investments in Special Drawing Rights (SDRs), gold holdings and to safeguard against economic
volatility;
(c) the steps taken/being taken by the Government to further strengthen service exports and remittances
as key contributors to forex reserves;
(d) the steps taken by the Government to increase the number of contingency measures
underpinned by forex reserves to manage any potential future financial or economic crises; and
(e) whether the Government is considering to leverage the growing reserves for large-scale investments
in green energy or technology-driven sectors to boost long-term economic growth, if so, the details
thereof?
ANSWER
THE MINISTER OF STATE FOR FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) India’s net services exports have increased from USD 143.3 billion in 2022-23 to USD 188.8
billion in 2024-25, as per Balance of Payments (BoP) data of the Reserve Bank of India (RBI). Service
exports are a vital contributor to India's forex inflows, contributing to the moderation of the current account
deficit and accretion of foreign exchange reserves.
(b) The RBI Act, 1934, provides the overarching legal framework for the deployment of reserves in
different foreign currency assets and gold within the broad parameters of currencies, instruments, issuers,
and counterparties. The foreign currency assets comprise multi-currency assets that are held in multi-asset
portfolios as per the existing norms, which conform to the best international practices followed in this
regard. Further, with the objective of exploring new strategies and products in reserve management while
diversifying the portfolio, a small portion of the reserves is being managed by external asset managers.
The investments made by the external asset managers are governed by the permissible activities as per the
RBI Act, 1934.(c) The Government of India has been following a multi-pronged approach to boost India’s services
exports, which comprises the following:
i. Negotiating meaningful market access through multilateral, regional and bilateral trade agreements.
ii. Trade promotion through participation in and organisation of national fairs/exhibitions like the Global
Exhibition on Services, Higher Education Summit, etc. Focused strategies are undertaken for specific
markets and sectors.
iii. Addressing domestic sectoral challenges and difficulties which are identified through periodic
consultations with the stakeholders. Moreover, efforts are made to engage with the concerned
Ministries/Departments to pursue a domestic reform agenda to make the services sector competitive
globally.
Inward remittances into India are being facilitated by enhanced convenience, speed, and transparency of
cross-border transfers. For instance, the RBI has allowed Money Transfer Operators (MTOs) to offer
digital products in conjunction with banks to facilitate more seamless transactions. In November 2021, the
RBI announced issuance of pre-paid instruments by banks and authorised non-bank entities, appointed as
Indian agent of overseas principal, to beneficiaries of remittances under the Money Transfer Service
Scheme. Further, remittances have benefited from reduced cost of cross-border transfers through the
leveraging of digital public infrastructure. India has been making efforts to enhance cross-border payments
with multiple bilateral arrangements for interlinking India’s Unified Payments Interface (UPI) with other
fast payment systems (FPSs) across the world, and its participation in Project Nexus to facilitate
multilateral linkage of FPSs of four ASEAN Nations (Malaysia, Philippines, Singapore, and Thailand).
(d) India’s foreign exchange reserves continue to be at comfortable levels, standing at USD 668.3 billion
as of March 2025, providing an import cover of about 11 months and covering 90.8 per cent of external
debt outstanding. The ratio of short-term debt (original maturity) to reserves stood at 20.1 per cent. The
latest position of forex reserves is USD 696.7 billion as of July 11, 2025.
Further, various measures have been taken by the RBI to enhance foreign exchange inflows into the
country by, inter alia, removing short-term investment and concentration limits for FPIs in corporate debt,
introducing Special Non-Resident Rupee accounts for non-residents with business interest in India to
facilitate cross-border transactions; raising interest rate ceiling on FCNR(B) deposits till March 2025 to
incentivise deposits etc.
(e) The foreign exchange reserves are invested with the objective of safety, liquidity, and returns and are
invested in approved sovereign and sovereign-guaranteed investments only.
****