Lok Sabha Question No. 1269 (UNSTARRED), answered on 2025-07-28
Subject: India's Forex Reserve Level
Ministry: FINANCE
Asked by: Shri Arun Bharti

## 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

## 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

## 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.