India Current Account to GDP Ratio

India's current account deficit to Gross Domestic Product (GDP) narrowed to 0.6% in Fiscal Year 2025 (FY25). This figure is the smallest deficit since 2020, an improvement from 0.7% of GDP in FY24. The current account deficit shrank to US$23.3 billion in FY25, down from US$26.0 billion in FY24. This improvement occurred after India recorded a current account surplus of 0.6% of GDP in the fourth quarter of FY24. The overall trade deficit reduced to US$78.1 billion in FY24, compared to US$121.6 billion in FY23. Higher net receipts from services and secondary income drove this narrowing. Net services receipts increased from US$143.3 billion in FY23 to US$162.8 billion in FY24. This growth was fueled by rising exports of software, travel and business services with India ranking as the seventh-largest global services exporter. Remittances also reached US$120 billion in 2023, contributing to the improved services balance. Despite a wider merchandise trade deficit of US$79.2 billion in the third quarter of FY25, an increase from US$71.6 billion in the third quarter of FY24, the overall reduction in the goods deficit and growth in services exports led to the current account improvement. Foreign portfolio investment saw a net inflow of US$44.1 billion in FY24, a significant increase from an outflow of US$5.2 billion in FY23. The robust performance of India's services sector particularly software and business services exports, continues to balance the deficit in goods trade. Moderation in merchandise imports and rising services exports directly improved the current account deficit. The Indian rupee's depreciation by approximately 6% against the US dollar in FY24 also influenced the current account deficit by making imports more expensive. India's record low current account to GDP was -4.8% in 2012 and the record high was 2.3% in 2003.