'Manageable': India's CAD seen at 1% of GDP in FY25 despite US tariffs; Crisil flags sharp fall in August imports

India's current account deficit (CAD) is expected to remain under control at around 1% of gross domestic product (GDP) in the current financial year, even as the economy faces pressure from steep US tariffs and global geopolitical uncertainties, according to a report by rating agency Crisil.

Crisil said the deficit will stay "manageable" thanks to resilient services exports, steady remittance inflows, softer crude oil prices, and an improving trade balance.

"India's current account deficit (CAD) is expected to remain manageable...we forecast CAD to be at 1 per cent of GDP this fiscal," the report stated.

The pressure on India’s exports has increased after the US imposed a fresh 25% penalty tariff from August 27 on top of the existing 25% reciprocal tariff, raising the total duty burden to 50%.

Negotiations are ongoing, and it remains unclear where tariffs will ultimately settle. In response, India has accelerated efforts to seal trade agreements with other partners to diversify its export markets.


Despite these headwinds, trade data for August 2025 showed encouraging signs. Merchandise exports grew 6.7% year-on-year to $35.1 billion, supported by oil, gems and jewellery, and core exports.

Crisil noted that India’s imports fell sharply in August, with merchandise imports down 10.1% year-on-year to USD 61.59 billion from USD 68.53 billion a year earlier.

At the same time, non-US exports grew 6.6% in August, an improvement over July’s 4.3% rise. A steep 51.2% contraction in gems and jewellery imports also played a major role in pulling overall imports lower.

The agency said that resilient services trade, steady remittance inflows, softer crude oil prices, and a narrowing trade deficit will together help keep the current account deficit (CAD) at a manageable level this fiscal, despite pressure from global headwinds and higher US tariffs.

(With inputs from ANI)