Overview

• India's current account deficit (CAD) is forecasted to rise from 1.0% of GDP in FY25 to 1.2–1.3% in FY26, driven by trade imbalances and geopolitical uncertainties.
• April 2025 saw a sharp merchandise trade deficit of $26.42 billion, up from $21.54 billion in March 2025, largely due to increased imports and declining exports.
• Non-oil non-gold imports, particularly in chemicals, machinery, and electronics, contributed significantly to the deficit, raising concerns of potential dumping activity.
• The US’s looming reciprocal tariffs on trading partners continue to pose risks to India’s export growth and trade stability.
• India’s services trade surplus, at $17.8 billion in April 2025, along with robust remittance inflows, provides critical support to balance the widening merchandise deficit.