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  3. India’s August current account deficit narrows to $5.2 billion

Economy

India’s August current account deficit narrows to $5.2 billion

RBI data show India's current account deficit eased to $5.2 billion in August 2026 from $6.1 billion a year earlier, with a capital account surplus of $50.6 billion.

Published 17 Oct 2026, 11:59 am 2 min read
Container port at dusk with dollar coins, representing India's trade and balance of payments
India's current account deficit narrowed in August 2026. Illustration: AI-generated.

Key points

  • India's current account deficit was $5.2 billion in August 2026, down from $6.1 billion in August 2025.
  • The merchandise trade deficit was $26.6 billion, as exports rose to $44.7 billion and imports to $71.3 billion.
  • The capital account showed a net inflow of $50.6 billion, against $0.5 billion a year earlier.
  • For April-August 2026, the current account deficit widened to $18.3 billion from $12.8 billion.

What happened

India’s current account deficit stood at $5.2 billion in August 2026, narrower than the $6.1 billion recorded in August 2025, according to preliminary Reserve Bank of India (RBI) balance of payments data released on 15 October 2026.

The balance of payments (BoP) is a record of all money flowing between India and the rest of the world. The current account covers trade in goods and services, transfers and income. The capital account covers investment and other financial flows.

Goods and services

  • Merchandise exports: $44.7 billion, up from $35.1 billion a year earlier.
  • Merchandise imports: $71.3 billion, up from $62.7 billion.
  • Net merchandise deficit: $26.6 billion, against $27.6 billion.
  • Net services surplus: $16.5 billion, against $15.6 billion. Services exports were $35.5 billion and services imports $18.9 billion.

Transfers and income

Net transfers, which include money sent home by Indians working abroad, were $12.8 billion, up from $12.2 billion. Net income, a negative item, deepened to -$8.0 billion from -$6.3 billion.

Bar chart of India's current account deficit in August 2025 and August 2026
Current account deficit, August, $ billion Chart: Finance.net.in, data: RBI.

Capital account

The capital account recorded a net inflow of $50.6 billion in August 2026, against $0.5 billion in August 2025. Net foreign direct investment (FDI) was $3.3 billion, compared with -$0.1 billion a year earlier. Net FDI into India was $5.2 billion, while Indian FDI abroad was $1.9 billion.

What it means for you

A current account deficit means India paid out more foreign currency than it earned from trade, services, transfers and income. A smaller monthly gap eases the pressure to fund that shortfall through inflows. The August figures show the deficit narrowing even as both exports and imports grew.

If you send money to family in India, transfers are a steady support to the current account. You can check what your remittance is worth with our money transfer calculator.

Background

The five-month picture is less comfortable. For April-August 2026, the current account deficit was $18.3 billion, against $12.8 billion in the same period of 2025. The merchandise deficit widened to $146.0 billion from $124.7 billion, as imports of $366.0 billion outpaced exports of $219.9 billion.

Services remained a cushion, with a net surplus of $85.8 billion in April-August 2026 against $79.9 billion. Net transfers rose to $66.8 billion from $55.6 billion. The capital account surplus for the period was $76.3 billion, compared with $12.0 billion a year earlier, and net FDI was $13.8 billion.

The figures are preliminary and may be revised. RBI notes that sub-components may not add up to totals because of rounding, and that errors and omissions are included under other capital. For related central bank coverage, see our report on the RBI’s forex hedging limit change.

What it means for you

A narrower August deficit shows the external gap eased even as trade grew. The April-August deficit is still wider than last year, so the five-month picture is mixed. Remittances and services exports continue to offset part of the goods trade gap.

Money Transfer to India Calculator Currency Converter

Frequently asked questions

What was India's current account deficit in August 2026?

It was $5.2 billion, compared with $6.1 billion in August 2025, according to preliminary RBI data.

What was the merchandise trade deficit in August 2026?

The net merchandise deficit was $26.6 billion, with exports at $44.7 billion and imports at $71.3 billion.

How did the April-August 2026 current account compare with last year?

The deficit widened to $18.3 billion from $12.8 billion in April-August 2025.

What was net FDI in August 2026?

Net foreign direct investment was $3.3 billion, against -$0.1 billion a year earlier.

Sources

  1. Developments in India’s Balance of Payments for the Month of August 2026 — RBI press releases
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  • Developments in India’s Balance of Payments for the Month of August 2026
Topics
  • Balance of payments
  • Capital account
  • Current account deficit
  • Foreign direct investment
  • RBI
Tags
  • exports
  • FDI
  • imports
  • RBI data

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