India's current account recorded a surplus of $7.1 billion, or 0.7% of GDP, in the January-March quarter of 2025-26. Though this is sharply lower than the surplus of $13.7 billion (1.4% of GDP) reported in the corresponding quarter a year earlier, most analysts are still surprised by a surplus as they were expecting a deficit. The surprise was largely driven by a 31% YoY surge in the remittance inflows to a record high of $41.3 billion in the quarter, which also exceeded the Q3 FY2026 levels by a healthy 17.5%.
According to preliminary Balance of Payments (BoP) data released by the Reserve Bank of India (RBI) on Monday, the country's merchandise trade deficit widened to $83.4 billion in the fourth quarter of FY26 from $59.3 billion in the year-ago period. Merchandise imports rose significantly to $196.6 billion while exports remained broadly flat at $113.1 billion.
The deterioration in the trade balance, however, was partly cushioned by robust growth in services exports and remittances.
Net services receipts increased to $60.4 billion during the quarter from $53.3 billion a year earlier, driven by strong performance in computer services and other business services. Personal transfer receipts, mainly comprising remittances from Indians working overseas, rose sharply to $43.5 billion from $33.9 billion a year ago.
The primary income account deficit, which largely reflects investment income payments, narrowed marginally to $11.1 billion from $11.9 billion in the corresponding quarter last year.
On the capital account side, foreign direct investment (FDI) inflows improved significantly, with net FDI inflows rising to $4.2 billion in the March quarter from just $0.4 billion a year earlier.
Foreign portfolio investors (FPIs), however, remained net sellers, with outflows increasing to $12 billion during the quarter compared with outflows of $5.9 billion in the same period of FY25.
Non-resident Indian (NRI) deposits recorded net inflows of $3.3 billion during the quarter, higher than $2.8 billion a year ago, while net inflows through external commercial borrowings (ECBs) moderated to $3.6 billion from $7.5 billion.