India's Current Account Deficit Surges: What It Means for the Economy

Current Account Deficit Overview

According to the Reserve Bank of India, the current account deficit for India expanded to USD 6.2 billion in June, a significant shift from a surplus of USD 1.2 billion recorded in the same month last year.

This increase in the deficit is largely attributed to a growing merchandise trade deficit, which escalated to USD 30.2 billion in June 2026, up from USD 19.2 billion a year prior.

Merchandise exports saw an uptick, reaching USD 41.2 billion in June compared to USD 35.3 billion in June 2025, while imports surged more rapidly to USD 71.4 billion from USD 54.5 billion.

The RBI's data also indicated that the surplus in services rose to USD 17.9 billion in June 2026, an increase from USD 16.2 billion the previous year.

Service exports climbed to USD 36.4 billion from USD 32.1 billion, with imports also rising to USD 18.5 billion from USD 15.9 billion.

Net transfers increased to USD 11.9 billion in June, up from USD 10.9 billion, while the net income deficit decreased to USD 5.8 billion from USD 6.8 billion.

On the capital account side, net inflows reached USD 9.1 billion in June 2026, contrasting with an outflow of USD 1.6 billion in June 2025.

Foreign direct investment was recorded at USD 1.3 billion in June, while foreign portfolio investment saw a net inflow of USD 2.5 billion.

The overall balance for June 2026 was positive at USD 2.9 billion, a turnaround from a deficit of USD 0.4 billion in June 2025.

For the April-June quarter, the merchandise trade deficit widened to USD 85.7 billion from USD 68.9 billion, while the services surplus grew to USD 52.2 billion from USD 47.9 billion.

Net transfers during this quarter rose to USD 41.4 billion, compared to USD 30.9 billion in the same period last year.

However, the overall balance for the quarter was negative at USD 8.1 billion, a decline from a positive balance of USD 4.5 billion in April-June 2025.