India’s current account deficit more than doubles to $7 billion in July as trade gap expands

India’s current account deficit widened to $7 billion in July from $3.2 billion a year earlier, as a larger merchandise trade deficit offset an improvement in net services exports and higher transfer receipts, according to preliminary data released by the Reserve Bank of India (RBI) on Tuesday.

The current account deficit for April-July 2026 stood at $11.2 billion, compared with $6.6 billion in the corresponding period a year earlier. The widening gap came as merchandise imports rose faster than exports, pushing the goods trade deficit to $117.8 billion during the first four months of the financial year, from $97.1 billion a year earlier.

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Merchandise exports increased to $45.1 billion in July from $37.4 billion a year earlier, while imports rose to $76.8 billion from $65.6 billion. This widened the monthly merchandise trade deficit to $31.7 billion from $28.2 billion. Between April and July, exports rose to $177.1 billion from $150 billion, while imports increased to $294.9 billion from $247.1 billion.

Net services receipts increased to $17.6 billion in July from $16.4 billion a year earlier. For April-July, net services exports rose to $69.3 billion from $64.3 billion, with services exports increasing to $144.5 billion from $131.2 billion.

Net transfer receipts, which include remittances, rose to $13.2 billion in July from $12.6 billion a year earlier. For April-July, transfers increased to $53.9 billion from $43.4 billion. However, net income outflows widened to $6.1 billion in July from $4 billion, although the April-July outflow narrowed marginally to $16.6 billion from $17.3 billion.

India’s net capital account balance rose sharply to $27.7 billion in July from $3.5 billion a year earlier. During April-July, net capital flows increased to $23.9 billion from $11.4 billion.

Foreign direct investment (FDI) inflows remained a key source of capital, with net FDI rising to $7.3 billion in July from $4.5 billion. Net FDI for April-July increased to $13.4 billion from $9.7 billion. Gross inflows into India rose to $10.7 billion in July from $7.2 billion, while outward FDI increased to $3.4 billion from $2.7 billion.

Foreign portfolio investment flows turned positive in July, with net inflows of $4.1 billion compared with an outflow of $2.5 billion a year earlier. However, for April-July, net FPI flows remained negative at $5.5 billion, compared with an outflow of $0.9 billion in the year-earlier period.

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External commercial borrowings recorded a net outflow of $2.3 billion in July, compared with a net inflow of $1.4 billion a year earlier. The April-July balance also turned negative at $1.3 billion, against a net inflow of $6.8 billion in the corresponding period last year.

Banking capital flows rose to $18.4 billion in July from $6 billion a year earlier. Non-resident Indian deposits accounted for $33.5 billion of net inflows during the month, compared with $1 billion a year earlier. For April-July, NRI deposits recorded net inflows of $36.2 billion, against $4.7 billion in the corresponding period last year.

The overall balance of payments recorded a surplus of $20.8 billion in July, compared with $0.3 billion a year earlier. For April-July, the overall balance stood at $12.7 billion, against $4.8 billion in the year-earlier period.