India’s current account deficit was recorded at $7 billion in July 2026, attributed to a rise in imports which outpaced merchandise exports, according to preliminary balance of payments data from the Reserve Bank of India. In July 2025, the deficit was $3.2 billion. Despite the widening current account deficit, the overall balance of payments (BoP) showed a significant improvement, posting a surplus of $20.8 billion compared to just $0.3 billion in July 2025.
Between April and July of FY27, the current account deficit increased to $11.2 billion from $6.6 billion in the same timeframe of the previous financial year, largely due to a growing merchandise deficit. In July alone, the merchandise deficit expanded to $31.7 billion from $28.2 billion year-over-year. Exports rose to $45.1 billion from $37.4 billion, while imports surged to $76.8 billion from $65.6 billion.
Net services exports showed a slight increase to $17.6 billion, and net transfers, bolstered by remittances, reached $13.2 billion, up from $12.6 billion a year prior. On the capital account, net inflows peaked at $27.7 billion in July, a sharp rise from $3.5 billion a year ago, driven by banking capital inflows of $18.4 billion compared to $6 billion previously. Foreign portfolio investment reflected a net inflow of $4.1 billion, reversing a net outflow of $2.5 billion from the previous year.
In summary, India’s BoP was in surplus of $20.8 billion in July, contrasting with a surplus of $0.3 billion the year before, while showing a total surplus in the April-July period of FY27 of $12.7 billion versus $4.8 billion for the same period in the previous financial year.
Why this story matters: Highlights the ongoing challenges in India’s trade balance and its impact on the economy.
Key takeaway: A significant widening of the current account deficit contrasted with a notable improvement in the capital account and overall BoP.
Opposing viewpoint: Some experts argue that reliance on imported goods could have long-term negative effects on the economy.
