In percentage terms, the Q3FY26 CAD increased to 1.3 per cent of GDP from 1.1 per cent of GDP in the year ago quarter
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The CAD in the reporting quarter was also wider than preceding quarter’s $12.3 billion.
CAD is a measure of a country’s trade where the value of the goods and services it imports exceeds the value of the products it exports.
In percentage terms, the Q3FY26 CAD increased to 1.3 per cent of GDP from 1.1 per cent of GDP in the year ago quarter. However, CAD in the reporting quarter was unchanged from the preceding quarter.
Aditi Nayar, Chief Economist, ICRA, observed that India’s CAD widened to $13.2 billion in Q3FY26 from $11.3 billion in the year ago quarter, while printing well below ICRA’s forecast of $20 billion for the quarter. The undershooting was largely led by lower-than-expected merchandise trade deficit as well as primary income outflows.
“Looking ahead, the unusually higher-than-expected MTD for January 2026 is likely to limit the seasonal improvement in the current account balance in Q4 FY26, unless the prints for February and March 2026 cool significantly,” she said.
Additionally, the recent surge in international crude oil prices, following the escalation of conflict in West Asia, is also likely to have some bearing on the import bill in the immediate term. ICRA currently expects the current account balance to print between “-$1.0 billion and +$1.0 billion” in Q4FY26.
“We estimate India’s current account deficit to print at 0.6-0.7 per cent of GDP in FY26, and rise thereafter to around 1 per cent of GDP in FY27, albeit with risks tilted to the upside,” Nayar said.
Merchandise trade deficit in the reporting quarter was higher at $ 93.6 billion against $79.3 billion in the year ago quarter.
Net services receipts increased to $57.5 billion in Q3FY26 from $51.2 billion a year ago.
Services exports have risen on a year-on-year (y-o-y) basis in major categories such as computer services and other business services, RBI said in a statement.
Net outgo on the primary income account, mainly reflecting payments of investment income, decreased to $12.2 billion billion in Q3FY26 from $16.4 billion in Q3FY25.
Personal transfer receipts, FDI, FPI
Personal transfer receipts under secondary income account, mainly representing remittances by Indians employed overseas, rose to $36.9 billion in Q3FY26 from $35.1 billion in Q3FY25.
Foreign direct investment (FDI) recorded a net outflow of $3.7 billion in Q3FY26, higher than the net outflow of $2.8 billion in Q3FY25. Foreign portfolio investment (FPI) recorded a net outflow of $0.2 billion in Q3FY26, lower than a net outflow of $11.4 billion in Q3FY25.
ECBs, NRI deposits, Fx Reserves
Net inflows under external commercial borrowings (ECBs) to India was lower at $3.3 billion in Q3FY26, compared with $4.4 billion in the corresponding period a year ago.
Non-resident deposits (NRI deposits) recorded higher inflows of $5.1 billion against $3.1 billion a year ago.
There was a depletion of $24.4 billion in the foreign exchange reserves (on a Balance of Payments basis) in Q3FY26 as compared with a depletion of $37.7 billion in Q3FY25..
Published on March 2, 2026