India’s CAD At 1.3% Of GDP In Q3FY26, Higher Trade Deficit Offset By Strong Services & Remittances

New Delhi: India’s current account deficit (CAD) stood at USD 13.2 billion, or 1.3 percent of GDP, in the October–December quarter (Q3FY26), according to preliminary balance of payments data released by the Reserve Bank of India (RBI). In the same quarter last year, the CAD was USD 11.3 billion, or 1.1 percent of GDP.

Trade Deficit Widens Sharply

The merchandise trade deficit increased to USD 93.6 billion in Q3FY26 from USD 79.3 billion a year earlier. During the quarter, goods exports were USD 111.7 billion, while imports were much higher at USD 205.3 billion. This resulted in a net goods deficit of USD 93.6 billion.

The wider trade gap was the main reason behind the higher current account deficit during the quarter.

Services Exports and Remittances Provide Support

Despite the higher trade deficit, there was strong growth in services exports and remittances. Net services receipts rose to USD 57.5 billion in Q3FY26, compared to USD 51.2 billion in Q3FY25. The RBI said services exports grew year-on-year in key areas like computer services and other business services.

Remittances sent home by Indians working abroad also increased. Personal transfer receipts rose to USD 36.9 billion from USD 35.1 billion a year earlier.

Net outgo under the primary income account, mainly investment income payments, fell to USD 12.2 billion from USD 16.4 billion in the previous year. This lower outflow also helped limit the overall deficit.

Capital Flows and Forex Reserves

Foreign direct investment (FDI) recorded a net outflow of USD 3.7 billion in Q3FY26, slightly higher than the USD 2.8 billion outflow last year. Foreign portfolio investment (FPI) saw a small net outflow of USD 0.2 billion, much lower than the USD 11.4 billion outflow in the same quarter last year.

Non-resident deposits recorded a net inflow of USD 5.1 billion, higher than USD 3.1 billion a year ago. External commercial borrowings (ECBs) brought in USD 3.3 billion, compared to USD 4.4 billion last year.

Foreign exchange reserves declined by USD 24.4 billion during the quarter on a balance of payments basis.

April–December Trend Shows Improvement

For the April–December 2025 period, the CAD moderated to USD 30.1 billion, or 1.0 percent of GDP, compared to USD 36.6 billion, or 1.3 percent of GDP, in the same period last year.

Net invisible receipts rose to USD 221.5 billion from USD 191.0 billion. Net FDI inflows increased to USD 3.0 billion, while FPI recorded net outflows of USD 4.3 billion.