India's July current-account gap widens sharply as capital inflows boost BoP surplus

The Reserve Bank of India released preliminary balance-of-payments figures indicating a $7 billion current-account deficit for July 2026, more than double the $3.2 billion deficit seen in the same month last year. The widening stemmed from a larger merchandise trade deficit, which expanded to $31.7 billion as imports rose to $76.8 billion while exports increased to $45.1 billion. Net services exports and remittances also grew modestly.

On the capital side, a net inflow of $27.7 billion—driven by banking capital and a sharp jump in NRI deposits to $33.5 billion—helped lift the balance-of-payments surplus to $20.8 billion, compared with a mere $0.3 billion surplus a year earlier. Foreign portfolio investment, foreign direct investment and short-term credit all posted sizable inflows, offsetting an outflow in external commercial borrowings. The April-July FY27 cumulative current-account gap reached $11.2 billion, widening from $6.6 billion in the prior year.