India’s Q1FY26 CAD narrows to $2.4 billion 

India’s current account deficit (CAD) narrowed to $2.4 billion (0.2% of GDP) in the April-June quarter (Q1FY26) from $ 8.6 billion (0.9% of GDP) in the year ago period and against a surplus of $13.5 billion (1.3% of GDP) in Q4:FY25, according to data released by the Reserve Bank of India (RBI) on Monday (September 1, 2025).

Merchandise trade deficit at $68.5 billion in Q1FY 26 was higher than $63.8 billion in Q1FY25.

Net services receipts increased to $ 47.9 billion in Q1FY26 from $ 39.7 billion a year ago. Services exports have risen on a y-o-y basis in major categories such as business services and computer services, as per RBI data.

Net outgo on the primary income account, primarily reflecting payments of investment income, increased to $12.8 billion in Q1FY26 from $10.9 billion in Q1FY25.

Personal transfer receipts, mainly representing remittances by Indians employed overseas, rose to $33.2 billion in Q1DY26 from $28.6 billion in Q1FY25.

In the financial account, foreign direct investment (FDI) recorded a net inflow of $5.7 billion in the quarter as compared with a net inflow of $6.2 billion a year ago.

Foreign portfolio investment (FPI) recorded a net inflow of $1.6 billion in Q1FY26 as compared to a net inflow of $0.9 billion a year ago, as per RBI data.

Net inflows under external commercial borrowings (ECBs) to India amounted to $3.7 billion in Q1:2025-26, as compared to US$ 1.6 billion in the corresponding period a year ago.

Non-resident deposits (NRI deposits) recorded a lower net inflow of $3.6 billion in the quarter than $4.0 billion in the same period last year.

There was an accretion of $ 4.5 billion to the foreign exchange reserves (on a BoP basis) in the quarter as compared to an accretion of $5.2 billion in Q1FY25.