India’s current account surplus improved on-year to $13.5 billion - 1.3% of gross domestic product (GDP) - in the last quarter of fiscal 2025 from $4.6 billion (0.5% of GDP). On a quarterly basis, the current account balance switched to a surplus from a deficit of $11.3 billion (1.1% of GDP).

The increased services trade surplus, $53.3 billion on-year in the fourth quarter from $42.7 billion, helped solidify the current account balance, even as the goods trade deficit widened to $59.5 billion from $52 billion. A rise in secondary income to $31.5 billion from $28.7 billion, driven largely by personal transfers including worker remmittances ($31.8 billion vs $28.9 billion), also contributed to the improvement.

That said, net financial inflows on-year dropped significantly in the fourth quarter of fiscal 2025, leading to only a small accretion to foreex reserves of RBI ($8.8 billion vs $30.8 billion in the fourth quarter of fiscal 2024). While net inflows under foreign direct investment (FDI) and other investment1 remained positive, they declined on-year. On the other hand, foreign portfolio investor (FPI) investment and financial derivatives recorded net ouflows during the fourth quarter of fiscal 2025.

With this, India’s current account deficit for fiscal 2025 stands at $23.3 billion (0.6% of GDP), narrowing slightly compared with $26 billion (0.7% of GDP) in fiscal 2024. While the goods trade deficit widened (7.3% of GDP vs 6.7% of GDP), it was offset by an increasing surplus in services trade (4.8% of GDP vs 4.5% of GDP).