India’s Balance of Payments (BoP) performance during July–September 2025 (Q2 2025-26). It covers the current account deficit, trade deficit, services growth, investment flows, and foreign exchange reserves.
🔹 What is India’s Current Account Deficit in Q2 2025-26?
India’s current account deficit (CAD) improved to US$ 12.3 billion (1.3% of GDP) in Q2 2025-26, compared to US$ 20.8 billion (2.2% of GDP) a year earlier.
🔹 Key Highlights of India’s BoP in Q2 2025-26
1. Merchandise Trade
- Trade deficit stood at US$ 87.4 billion, slightly lower than US$ 88.5 billion in Q2 2024-25.
2. Services Sector
- Net services receipts increased to US$ 50.9 billion (vs. US$ 44.5 billion last year).
- Strong services exports led growth, especially in IT services and business services.
3. Primary Income Outflows
- Net outflow rose to US$ 12.2 billion from US$ 9.2 billion, mainly due to higher investment income payments.
4. Remittances (Secondary Income)
- Personal transfer receipts (remittances) increased to US$ 38.2 billion from US$ 34.4 billion.
5. Financial Account Movements
- FDI: Net inflows of US$ 2.9 billion vs. an outflow of US$ 2.8 billion previously.
- FPI: Net outflows of US$ 5.7 billion (vs. US$ 19.9B inflow last year).
- ECBs: Net inflows of US$ 1.6 billion (lower than US$ 5.0B earlier).
- NRI Deposits: Net inflow of US$ 2.5 billion (vs. US$ 6.2B).
6. Forex Reserves
- India saw a depletion of US$ 10.9 billion in forex reserves on a BoP basis.
- Last year, there was an accretion of US$ 18.6 billion.
India’s BoP Performance in H1 2025-26 (April–September)
🔹 What is India’s CAD for H1 2025-26?
India’s CAD fell to US$ 15.0 billion (0.8% of GDP) in H1 2025-26 compared to US$ 25.3 billion (1.3% of GDP) in H1 2024-25.
🔹 Key Highlights for H1 2025-26
1. Strong Invisible Receipts
- Net invisibles reached US$ 141.3 billion (vs. US$ 123.0B last year).
- Driven by higher services exports and remittances.
2. FDI and FPI Trends
- FDI inflows: Rose strongly to US$ 7.7 billion from US$ 3.4 billion.
- FPI: Recorded net outflows of US$ 4.1 billion, compared to US$ 20.8 billion inflows last year.
3. Forex Reserves
- Forex reserves fell by US$ 6.4 billion in H1 2025-26.
- Last year, reserves increased by US$ 23.8 billion.
Conclusion
India’s Balance of Payments shows a clear improvement in the current account deficit due to stronger services exports and higher remittances. However, financial flows remain under pressure, with foreign portfolio investors pulling money out. Lower FDI and weaker inflows into NRI deposits also weigh on the overall BoP position. A decline in forex reserves reflects the challenging global environment.
