Current account surplus narrows on higher imports

MUMBAI: India’s current account surplus narrowed to $7.1 billion in the Jan-Mar 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, with the surplus halving to 0.7% of GDP from 1.4%.

On a sequential basis, however, the current account recorded a $22.6 billion swing, turning a $15.5 billion deficit in Oct-Dec 2025 into a $7.1 billion surplus, led by an improvement in the goods balance as the deficit narrowed by $12.4 billion from $95.9 billion to $83.4 billion.

Net services receipts increased to $60.4 billion in Jan-Mar 2026 from $53.3 billion a year earlier, while personal transfer receipts under the secondary income account rose to $43.5 billion from $33.9 billion.

In the financial account, FDI recorded a net inflow of $4.2 billion in Jan-Mar 2026, higher than $0.4 billion a year earlier, while FPI recorded a net outflow of $12 billion, higher than the outflow of $5.9 billion in the corresponding period.

The narrowing of surplus was driven by a widening of the goods trade deficit, which expanded by $24.1 billion from $59.3 billion in Jan-Mar 2025 to $83.4 billion in Jan-Mar 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.

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.
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