India’s CAD Widens to $6.2B in June: RBI Data

India’s current account deficit (CAD) expanded significantly to USD 6.2 billion in June 2026, a substantial shift from the USD 1.2 billion surplus recorded in the same month last year. This widening deficit was largely attributed to a notable rise in the merchandise trade deficit, according to preliminary data from the Reserve Bank of India.

Understanding the Widening Gap

The primary factor behind the expanded current account deficit was the merchandise trade imbalance. While exports did increase, the growth in imports outpaced them, leading to a larger deficit in goods trade.

• Merchandise Trade Deficit: USD 30.2 billion in June 2026 (from USD 19.2 billion in June 2025)
• Merchandise Exports: USD 41.2 billion (from USD 35.3 billion)
• Merchandise Imports: USD 71.4 billion (from USD 54.5 billion)

Despite the significant merchandise trade deficit, other components of the current account provided some positive contributions. Both the services surplus and net transfers showed an improved performance compared to the previous year.

• Services Surplus: USD 17.9 billion (from USD 16.2 billion)
• Services Exports: USD 36.4 billion (from USD 32.1 billion)
• Services Imports: USD 18.5 billion (from USD 15.9 billion)
• Net Transfers: USD 11.9 billion (from USD 10.9 billion)
• Net Income Deficit: Narrowed to USD 5.8 billion (from USD 6.8 billion)

Capital Inflows and Overall Balance

On the capital account, India recorded a net inflow in June 2026, reversing a net outflow from the previous year. This inflow provided crucial support to the nation’s external financing.

• Capital Account Net Inflow: USD 9.1 billion (reversal from USD 1.6 billion outflow in June 2025)
• Net Foreign Direct Investment: USD 1.3 billion
• Foreign Portfolio Investment Inflows: USD 2.5 billion

Consequently, the overall balance for June 2026 registered a positive figure, contrasting with a deficit in the same period last year. This indicates that despite the current account pressures, capital inflows helped maintain external stability for the month.

• Overall Balance (June 2026): Positive USD 2.9 billion
• Overall Balance (June 2025): Deficit of USD 0.4 billion

Quarterly Trends Reveal Broader Picture

Looking at the entire April-June quarter, the merchandise trade deficit broadened further compared to the previous year. However, the services surplus and net transfers continued to expand, offering some counterbalancing effects.

• Merchandise Trade Deficit (April-June): USD 85.7 billion (from USD 68.9 billion)
• Services Surplus (April-June): USD 52.2 billion (from USD 47.9 billion)
• Net Transfers (April-June): USD 41.4 billion (from USD 30.9 billion)

Despite these positive contributions, the overall balance for the April-June quarter concluded in a deficit. This marks a significant shift from the positive balance observed during the same quarter in 2025.

• Overall Balance (April-June 2026): Negative USD 8.1 billion
• Overall Balance (April-June 2025): Positive USD 4.5 billion