India posts 0.7% current account surplus in March quarter

MUMBAI: India reported a current account surplus of 0.7% of gross domestic product (GDP) in the March quarter of FY26, down from 1.4% a year earlier, according to Reserve Bank of India (RBI) data released on Monday.

The March-quarter (Q4FY26) surplus marked a reversal from the $13.2 billion deficit recorded in the preceding quarter, although it was lower than the year-ago surplus of $13.7 billion.

For the full year, the current account deficit increased in absolute terms to $25.2 billion from $22.9 billion a year earlier, but remained steady at 0.6% of GDP.

The current account tracks the flow of goods, services and investment income between India and the rest of the world. A surplus indicates that inflows exceeded outflows during the period, signalling improved external stability.

According to RBI data, net services receipts rose to $60.4 billion in the March quarter from $53.3 billion a year earlier, driven by growth in exports of computer services and other business services. Personal transfer receipts—primarily comprising remittances from Indians working overseas—also increased to $43.5 billion from $33.9 billion a year ago.

The ongoing conflict in West Asia had raised concerns about a potential disruption in remittance flows from overseas workers.

“The positive surprise on the current account was due to remittances. The West Asia crisis may have resulted in precautionary transfer of funds,” said Gaura Sengupta, chief economist, IDFC First Bank.

Sengupta added that the trade deficit remained range-bound as crude oil import volumes declined in March. “On the capital account, the surplus was partly due to the $20 billion buy-sell swaps conducted by the RBI in Q4FY26.”

In the financial account, net foreign direct investment (FDI) inflows increased to $4.2 billion in Q4FY26 from $0.4 billion a year earlier. Foreign portfolio investors (FPIs), however, pulled out a net $12 billion during the quarter, compared with net outflows of $5.9 billion in the year-ago period.

External commercial borrowings recorded net inflows of $3.6 billion in Q4FY26, down from $7.5 billion a year earlier, RBI data showed.

Amid sustained capital outflows and pressure on the rupee, the RBI and the Centre on Friday announced a series of measures to attract foreign capital. These included widening overseas investors' access to government securities, easing investment restrictions for FPIs and extending tax incentives on sovereign bond investments.

Analysts expect the measures to attract inflows of $35-45 billion.