Document title: Developments in India's Balance of Payments during the First Quarter (April‑June) of 2026‑27

Issuing authority: Reserve Bank of India

Reference number: Press Release: 2026‑2027/1015

Date: September 01, 2026

Macroeconomic Outlook

The preliminary data for Q1 2026‑27 show that India’s current account deficit widened to US$ 4.2 billion, equivalent to 0.5 % of GDP, compared with a deficit of US$ 3.4 billion (0.4 % of GDP) in the same quarter a year earlier. Merchandise trade recorded a larger deficit of US$ 86.1 billion, up from US$ 68.9 billion YoY, reflecting higher imports across major categories. By contrast, net services receipts improved to US$ 51.6 billion from US$ 47.9 billion, driven by higher exports of computer services, other business services and transportation services. Primary income outflows, mainly investment income payments, fell to US$ 10.5 billion from US$ 13.3 billion, while secondary income receipts – largely remittances – rose sharply to US$ 42.9 billion from US$ 33.2 billion.

External Sector and Currency

The current account balance, after accounting for goods, services, primary and secondary income, resulted in a net deficit of US$ 4.2 billion. The trade deficit widened due to a larger gap between credit (US$ 132.0 billion) and debit (US$ 218.0 billion) in goods. Services contributed a net credit of US$ 51.6 billion, while primary income contributed a net debit of US$ 10.5 billion and secondary income a net credit of US$ 40.8 billion. Foreign exchange reserves declined by US$ 8.1 billion on a BoP basis in the quarter, reversing the US$ 4.5 billion accretion recorded in Q1 2025‑26.

Capital Markets and Flows

In the financial account, total net inflows were US$ 2.6 billion. Direct investment (FDI) recorded a net inflow of US$ 6.1 billion, up from US$ 5.2 billion a year earlier. Portfolio investment (FPI) showed a net outflow of US$ 9.6 billion, reversing the US$ 1.6 billion net inflow in the prior year. Other investments contributed a net inflow of US$ 7.7 billion. Non‑resident Indian (NRI) deposits posted a net inflow of US$ 2.8 billion, down from US$ 3.6 billion. External commercial borrowings (ECBs) to India amounted to a net inflow of US$ 3.3 billion, lower than the US$ 4.4 billion recorded in Q1 2025‑26.

Overall, the BoP data indicate a widening current account deficit driven by a larger trade gap, offset partially by stronger services earnings and reduced primary income outflows. Financial account dynamics show continued attractiveness for FDI but a reversal in portfolio flows, while reserve levels fell due to the net deficit.