India's Q2 Current Account Deficit Narrows To $12.3 Billion

India's current account deficit narrowed to $12.3 billion or 1.3% of GDP in the second quarter of the current fiscal from $20.8 billion or 2.2% of GDP in the corresponding period last year, according to Reserve Bank of India data released on Monday.

The moderation can be attributed to lower merchandise trade deficit and higher services receipts.

Merchandise trade deficit stood at $87.4 billion in the July-September period, lower than $88.5 billion last year.

Net services receipts increased to $50.9 billion from $44.5 billion a year ago. Services exports have risen on a year-on-year basis in major categories such as computer services and other business services, the RBI said.

For the first half of the fiscal, the CAD declined to $15 billion (0.8% of GDP) from $25.3 billion (1.3% of GDP) last year.

The second quarter net foreign direct investment (FDI) inflow was $2.9 billion, compared to $2.8 billion outflow last year. Foreign portfolio investment (FPI) recorded a net outflow of $5.7 billion, against a net inflow of $19.9 billion a year ago.

Personal transfer receipts under secondary income account, mainly representing remittances by Indians employed overseas, rose to $38.2 billion in Q2FY26 from $34.4 billion in Q2FY25.

The RBI data also reported a depletion of $10.9 billion to the foreign exchange reserves (on a balance of payments basis) in Q2, as the central bank tried to stabilise the rupee during the period. The forex had an accretion of $18.6 billion in Q2 of last year.