MUMBAI: India's current account surplus narrowed to $7.1 billion in the January-March 2026 quarter from $13.7 billion a year earlier, as a surge in gold imports and a deterioration in merchandise trade outweighed gains in services exports and remittance inflows. The surplus halved to 0.7% of GDP from 1.4% in the same period last year.
Sequential improvement
On a sequential basis, however, the current account recorded a $22.6 billion swing, turning a $15.5 billion deficit in the October-December 2025 quarter into a $7.1 billion surplus. This improvement was led by a narrowing of the goods trade deficit by $12.4 billion, from $95.9 billion to $83.4 billion.
Services and remittances
Net services receipts increased to $60.4 billion in the January-March 2026 quarter from $53.3 billion a year earlier. Personal transfer receipts under the secondary income account rose to $43.5 billion from $33.9 billion, driven by higher remittance inflows.
Financial account flows
In the financial account, foreign direct investment (FDI) recorded a net inflow of $4.2 billion in the January-March 2026 quarter, higher than $0.4 billion a year earlier. Foreign portfolio investment (FPI) recorded a net outflow of $12 billion, higher than the outflow of $5.9 billion in the corresponding period.
Trade deficit widening
The narrowing of the surplus was driven by a widening of the goods trade deficit, which expanded by $24.1 billion from $59.3 billion in January-March 2025 to $83.4 billion in January-March 2026. The deterioration was led by a rise in non-monetary gold imports, where outflows increased from $9.5 billion to $22.6 billion, exerting a negative impact of $13.1 billion. At the same time, the general merchandise trade balance worsened by $11.4 billion as exports declined by $3.7 billion to $112.6 billion while imports rose by $7.7 billion to $174 billion.
Offsetting factors
Partially offsetting this drag, net secondary income increased by $9.7 billion, rising from $31.5 billion to $41.3 billion, supported by higher remittance inflows. Services surplus expanded, driven by computer services where net receipts rose by $5.6 billion to $47.1 billion, supported by a $6.4 billion increase in exports. Professional and management consulting services also recorded gains, with the surplus increasing by $3.2 billion to $19.7 billion on the back of a $4 billion rise in exports.
