India recorded a current account surplus of $7.1 billion, equivalent to 0.7% of GDP, in the January–March quarter of FY26, supported by robust services exports, higher remittance inflows, and stronger foreign direct investment (FDI) flows, according to data released by the Reserve Bank of India (RBI).

Key Highlights

• India posted a $7.1 billion current account surplus in Q4 FY26 despite widening trade deficit.
• Strong services exports, remittances and FDI inflows strengthened India's external sector resilience.

The surplus marks a sharp turnaround from the current account deficit recorded in the previous quarter, although it was lower than the $13.7 billion surplus (1.4% of GDP) reported in the corresponding quarter of FY25.

For the full fiscal year FY26, India's current account deficit (CAD) stood at $25.2 billion, or 0.6% of GDP, broadly in line with FY25 levels.

Services Exports and Remittances Offset Trade Deficit

The improvement in India's external balance came despite a significant widening in the merchandise trade deficit, which expanded to $83.4 billion during the March quarter from $59.3 billion a year earlier. Rising imports, particularly gold and other merchandise, weighed on the trade balance.

However, strong growth in invisible earnings helped offset the deterioration.

Net services receipts increased to $60.4 billion, up from $53.3 billion in the year-ago quarter, driven by continued strength in computer services and business services exports. Meanwhile, personal transfer receipts - primarily remittances from overseas Indians - surged to $43.5 billion from $33.9 billion a year earlier.

The rise in remittances and services exports continues to reinforce India's external sector resilience amid a challenging global environment.

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FDI Inflows Strengthen, Financial Account Improves

India's financial account also showed stronger capital inflows during the quarter. Net FDI inflows rose to $4.2 billion, compared with just $0.4 billion in the corresponding period last year. Non-resident Indian (NRI) deposits remained supportive, with net inflows increasing to $3.3 billion from $2.8 billion.

Additionally, net outgo under the primary income account, which includes investment income payments, moderated to $11.1 billion, providing further support to the current account position.

FY26 External Sector Remains Resilient

For FY26 as a whole, net invisible receipts climbed to $312 billion, up from $264 billion in FY25, reflecting sustained momentum in services exports and remittance inflows. However, India's foreign exchange reserves declined by $23.6 billion on a balance-of-payments basis, while foreign portfolio investors remained net sellers during the fiscal year.

Economists note that while India's external accounts remain relatively strong, rising energy prices, geopolitical tensions, and higher import costs could pose challenges to the current account outlook in FY27.