Our Bureau
Mumbai
There was a report put out this Wednesday, on September 3rd, these tariffs imposed by the United States President Donald Trump have weighed down the merchandise exports. However even with the struggles because of the tariffs, India’s services trade surplus is expected to surge up to a record $205-207 billion in FY26.
It was reported that the country’s Current Account Deficit (CAD) has dropped down at a significant rate and has reached $2.4 billion which is 0.2% of the country’s Gross Domestic Product (GDP) in Q1 of FY26. This was significantly lower than the $8.6 billion deficit that was recorded in Q1 of FY25 and was 0.9% of GDP.
The Investment Information and Credit Rating Agency (ICRA) had also predicted the fall to 0.7% of GDP earlier but the final outcome was well below their forecast. It was reported that it was all primarily aided by stronger-than-expected remittances and a higher services trade surplus.
The ICRA stated that if these import duties stay put through this fiscal year then it is highly expected that India’s CAD will exceed 1% of GDP in FY26, compared with 0.6 per cent in FY25. The report had also warned the market that the CAD will grow even further in the next quarter on the back of sharp rise in the merchandise trade deficit and will reach $13-15 billion that is around 1.5% of the country’s GDP.
In the first quarter of FY26, the country witnessed net financial inflows of $8.1 billion after outflows in the second half of last year. But on the other hand, reserve asset accretion moderated to $4.5 billion from $8.8 billion in the final quarter of last year as per the report.
