India has enough forex for over 8 months of imports
What's the story
India's foreign exchange reserves are in a strong position, according to a Moneycontrol analysis. The country's foreign currency assets stood at $552.3 billion at the end of FY26, enough to cover nearly 260 days of merchandise imports. This is about 71% of annual imports based on an estimated import bill of $775 billion for FY26. The total forex reserves, including gold, were pegged at $691.1 billion, enough to cover nearly 89% of annual imports in FY26 alone.
Reserve comparison
Current reserve position stronger than 1991 balance-of-payments crisis
India's current reserve position is much stronger than during the 1991 balance-of-payments crisis. Back then, foreign currency assets had plummeted to just $2.2 billion. Total reserves, including gold, stood at $5.8 billion, covering 24% of annual imports. Even now, India's reserve adequacy is lower than the pandemic peak but still comfortable by historical standards with import cover at 260 days in FY26 versus a record high of 497 days in FY21 when imports were compressed.
Current status
Reserve adequacy at lowest in about 11 years
India's reserve adequacy is currently at its lowest in about 11 years. When the NDA government came to power in 2014, foreign currency assets were enough to cover nearly 71% of annual imports, similar to today's levels. However, over the past 12 years, these assets have averaged around 86% of annual imports compared with an average of around 84.6% during FY05-FY14 period.
Asset drop
Recent decline in forex reserves explained
The decline in India's forex reserves can be attributed to drop in foreign currency assets: from $567.6 billion in FY25 to $552.3 billion in FY26, and sharp rise in imports hitting a high of $775 billion. Prime Minister Narendra Modi's call for Indians to conserve fuel, postpone gold purchases, and avoid unnecessary foreign travel may not indicate an impending forex crisis, but rather an effort to create an additional buffer against rising commodity prices and geopolitical tensions impacting the rupee.