India Current Account Deficit Seen at 1.8% of GDP in FY27

India's current account deficit is forecast at 1.8% of gross domestic product in FY27, a report showed, trimming the earlier projection of roughly 2%. The revision follows a stable outturn in the external sector during the preceding fiscal year. The trade deficit widened over the same period.

The report did not detail the specific factors that kept the external account stable. Services exports led by information technology and business process outsourcing, along with remittance inflows from Indians abroad, have historically narrowed India's merchandise trade gap, economists said. The trade deficit itself widened in FY26, driven by higher gold imports and a recovery in crude oil prices.

The services surplus grew enough to absorb much of that pressure, analysts said. Remittances also ran above trend, providing a steady source of foreign-exchange inflow.

A current account deficit of 1.8% of GDP is well within the range the Reserve Bank of India considers sustainable. The central bank has historically flagged a level around 2.5% as the threshold where external vulnerability begins to build. A deficit below 2% reduces the need for aggressive currency intervention and supports the rupee, economists have noted. It also gives the RBI more room to focus on domestic inflation and growth without worrying about an external financing gap.

Capital flows into India have been uneven. Foreign portfolio investors pulled money out of Indian equities during parts of FY26. Foreign direct investment held steady. External commercial borrowings also provided a buffer. The rupee came under periodic pressure. The RBI's intervention in the spot and forward markets kept volatility contained.