Daijiworld Media Network - Mumbai

Mumbai, Dec 1: India’s current account deficit (CAD) narrowed to $12.3 billion, or 1.3% of GDP, in the second quarter (July–September) of 2025-26, down from $20.8 billion, or 2.2% of GDP, in the same period last year, according to Reserve Bank of India (RBI) data released on Monday.

The merchandise trade deficit slightly improved to $87.4 billion from $88.5 billion in Q2 of 2024-25. Meanwhile, net services receipts rose to $50.9 billion from $44.5 billion a year earlier, driven by higher exports in key segments such as computer and business services.

Net outgo on the primary income account, mainly reflecting investment income payments, increased to $2.2 billion from $9.2 billion in Q2 of 2024-25. Personal transfers, largely remittances by Indians abroad, climbed to $38.2 billion from $34.4 billion.

Foreign direct investment (FDI) saw a net inflow of $2.9 billion, compared with a net outflow of $2.8 billion in Q2 2024-25. In contrast, foreign portfolio investment (FPI) recorded a net outflow of $5.7 billion, compared with a net inflow of $9.9 billion a year ago.

Net inflows under external commercial borrowings (ECBs) were $1.6 billion, down from $5 billion, while non-resident deposits contributed $2.5 billion, compared with $6.2 billion last year.

On a balance of payments basis, India’s foreign exchange reserves saw a decline of $10.9 billion during the quarter, against an increase of $18.6 billion in Q2 of the previous year.

The data indicates a moderation in the current account deficit, supported by rising services exports and remittances, even as portfolio flows and reserve accumulation showed pressure.