India posts $13.5 bn current account surplus in March 2025 quarter

For the fiscal 2024-2025, the country’s current account deficit was $23.3 billion, or 0.6 per cent of GDP, compared to $26 billion, 0.7 per cent of GDP during 2023-24, primarily due to higher net invisibles receipts.

The current account deficit is the difference between exports and imports of goods and services. It is a key indicator of the country’s external sector.

“While the current account balance expectedly reported a seasonal surplus in Q4 FY2025, the size of the same overshot our expectations, amid a surprise dip in primary income outflows in the quarter. This led to the unexpected narrowing in the CAD to 0.6 per cent of GDP in FY2025 from 0.7 per cent in FY2024,” said Aditi Nayar, chief economist, head – Research & Outreach, ICRA Ltd.

During Q4 FY2025, merchandise trade deficit was at $59.5 billion, higher than $52 billion in Q4 FY2024. However, it moderated from $79.3 billion in Q3 FY2025, the RBI data showed.

Net services receipts increased to $53.3 billion in Q4 FY2025 from $42.7 billion a year ago. Services exports have risen on a year-on-year basis in major categories such as business services and computer services.

In the financial account, foreign direct investment (FDI) recorded a net inflow of $0.4 billion in January-March 2024-25 as compared to an inflow of $2.3 billion in the corresponding period of FY2024. Net inflow under FDI at $1 billion during 2024-25 was lower than $10.2 billion during 2023-24.

Foreign portfolio investment (FPI) recorded a net outflow of $5.9 billion in Q4 FY2025 as against a net inflow of $11.4 billion in the same quarter of FY2024. During FY2025, FPI recorded a net inflow of $3.6 billion, lower than $44.1 billion a year ago.

Net inflows under external commercial borrowings (ECBs) to India amounted to $7.4 billion in Q4 FY2025, as compared to $2.6 billion in the corresponding period a year ago.

Non-resident deposits (NRI deposits) recorded a net inflow of $2.8 billion in fourth quarter of FY2025, lower than $5.4 billion a year ago.

There was an accretion of $8.8 billion to the foreign exchange reserves (on a Balance of Payment basis) in Q4 FY2025 as compared to an accretion of $30.8 billion in Q4 FY2024.

“We foresee India’s current account deficit to average 1 per cent of GDP in FY2026, assuming an average crude oil price of around $70/barrel for the fiscal, which is eminently manageable in spite of the prevailing global uncertainties,” Nayar said.