India Records Surprise Current Account Surplus of $7.1 Billion in Q4 FY26

India has recorded the current account surplus of $7.1 billion in the fourth quarter of FY26 which is equivalent to 0.7% of GDP. It is mainly driven by the service exports, record remittance inflows from Indian who are live abroad and it narrow down the trade imbalance. This numbers are released by the Reserve Bank of India (RBI).

India’s Current Account Surplus in Q4

As per the latest RBI data, India have posted the current account surplus of $7.1 billion during the period of January-March 2026 (Q4 of FY26).

This marks significant turnaround from the current account deficit of the $13.2 billion or 1.3% of GDP from the previous quarter.

The surplus represented the 0.7% of GDP and exceeded market expectations and reflected the strong performance in India’s invisible trade components such as services exports and remittances.

What is the Current Account?

The current account is the key component of the country’s Balance of Payments (BoP) and records transactions involving the,

• Exports and imports of goods
• Exports and imports of services
• Income from the investments
• Remittances and transfers

A current account surplus occurs when the country earns more foreign exchange than it spends while the deficit indicates higher outflows than inflows.

Strong Services Exports Supported the Surplus

One of the major contributors to the surplus was the India’s strong performance in services exports. Net services receipts are increased to $60.4 billion during Q4 FY26 compared to $53.3 billion in the same quarter of the previous year.

Growth was particularly visible in the,

• Computer services
• IT-enabled services
• Business services
• Professional consulting services

India’s globally competitive services sector set to continues to act as the major source of foreign exchange earnings and remains a key strength of the economy.

Inflows of Record Remittance

The major highlight of the quarter was the sharp increase in to the remittance inflows.

Personal transfer receipts which largely consist of the money sent home by Indians working abroad and it reached a record $43.5 billion during Q4 FY26.

This was significantly higher than the $33.9 billion recorded during the same quarter of the last year.

The surge in the remittances also played a crucial role in offsetting the merchandise trade deficit and strengthening the India’s current account position.

Merchandise Trade Deficit Remained Elevated

Despite the current account surplus India’s merchandise trade deficit has been remained substantial.

The trade deficit stood at the $83.4 billion during Q4 FY26 compared with the $59.3 billion during the same period a year earlier.

The merchandise trade deficit occurs when the imports exceed exports of physical goods.

Higher import demand and particularly for energy and industrial inputs continued to exert pressure on to the India’s trade balance.

Foreign Portfolio Investors Continue to Exit

While the current account showed improvement but the capital flows remained weak.

Foreign Portfolio Investment (FPI) recorded the net outflow of $12 billion during the quarter and it is significantly higher than the $5.9 billion outflow reported a year earlier.

The continued withdrawal of the foreign investors shows the global financial uncertainties, geopolitical tensions and shifting investment preferences.

Balance of Payments Returns to Surplus

India’s overall Balance of Payments (BoP) recorded the surplus of the $7.2 billion during Q4 FY26.

This is te significant improvement compared to the BoP deficit of $24.4 billion which was recorded in the previous quarter.

The improvement reflects the stronger external earnings and relatively better financing conditions despite the continued capital account pressures.

However, for the entire FY26, India has recorded a BoP deficit of around $23.6 billion which is substantially higher than the $5 billion deficit seen in FY25.