India’s CAD narrows to 1.3% of GDP in Sept quarter, says Reserve Bank

Mumbai: India’s current account deficit (CAD) narrowed to $12.3 billion, or 1.3 per cent of GDP, in the September quarter, helped by a reduced merchandise trade gap, stronger services exports and higher remittances, the Reserve Bank of India said on Monday. The deficit had stood at $20.8 billion (2.2 per cent of GDP) a year earlier, but was significantly lower at $2.4 billion (0.2 per cent of GDP) in the June quarter.

For the first half of FY26, the CAD fell to $15 billion, or 0.8 per cent of GDP, compared with $25.3 billion (1.3 per cent of GDP) in the same period last year.

The merchandise trade deficit eased slightly to $87.4 billion in July–September from $88.5 billion a year ago. Net services receipts rose sharply to $50.9 billion from $44.5 billion, driven largely by stronger computer services exports. Personal transfer receipts, mainly remittances from Indians abroad, in-creased to $38.2 billion from $34.4 billion in the year-ago quarter.

However, net outgo on the primary income account, reflecting payments on investments, widened to $12.2 billion from $9.2 billion a year earlier.

Foreign direct investment improved, recording a net inflow of $2.9 billion versus a net outflow of $2.8 billion in Q2 FY25. In contrast, foreign portfolio investment saw a net outflow of $5.7 billion, compared with a net inflow of $19.9 billion a year ago.

Net inflows through external commercial borrowings moderated to $1.6 billion, down from $5 billion in the same quarter last year. Deposits by non-resident Indians also declined to $2.5 billion from $6.2 bil-lion.

On a balance of payments basis, India’s foreign exchange reserves fell by $10.9 billion during the quar-ter, reversing an accretion of $18.6 billion in Q2 FY25, the RBI added.