India's current account deficit (CAD) widened to $13.2 billion, or 1.3% of GDP, in the third quarter of FY26, driven by a higher merchandise trade deficit and foreign investment outflows. This marks an increase from $11.3 billion, or 1.1% of GDP, in the corresponding quarter of FY25. The merchandise trade deficit expanded to $93.6 billion in Q3FY26 from $79.3 billion a year earlier, primarily due to weakened exports to the US 

The services sector, however, provided a cushion, with net services receipts rising to $57.5 billion from $51.2 billion, supported by strong exports of computer and business services. Remittances also remained resilient, increasing to $36.9 billion from $35.1 billion. Net outgo under the primary income account, mainly reflecting investment income payments, decreased to $12.2 billion from $16.4 billion

In the financial account, foreign direct investment (FDI) recorded a net outflow of $3.7 billion, while foreign portfolio investment (FPI) witnessed a small net outflow of $0.2 billion. Non-resident deposits brought in $5.1 billion, up from $3.1 billion, and external commercial borrowings moderated to $3.3 billion from $4.4 billion

For April-December 2025, the CAD moderated to $30.1 billion, or 1% of GDP, from $36.6 billion, or 1.3% of GDP, in the same period last year. Economists expect the current account balance to print between -$1.0 billion and +$1 billion in Q4 FY26, with India's CAD estimated to be around 0.6-0.7% of GDP in FY26 

Current Account Deficit