Furthermore, despite rising geopolitical uncertainties and trade tensions, India’s merchandise trade remained robust in April 2025

FPJ News Service mumbai

The Reserve Bank on Friday said the county’s net services and remittance receipts are likely to remain in surplus, counterbalancing the rise in trade deficit. The current account deficit for 2025-26 is expected to remain well within the sustainable level.

With the moderation in trade deficit in Q4:24-25, alongside strong services exports and remittance receipts, the current account deficit for 2024-25 is expected to remain low. Furthermore, despite rising geopolitical uncertainties and trade tensions, India’s merchandise trade remained robust in April 2025. As imports grew faster than exports, the trade deficit however widened during the month. On the financing side in 2024-25, foreign portfolio investment to India dropped sharply to $1.7 billion, as foreign portfolio investors booked profits in equities.

Net foreign direct investment (FDI) is too moderated. It is germane to point out that this moderation is on account of a rise in repatriation and net outward FDI while gross FDI actually increased by 14%. Rise in repatriation is a sign of a mature market where foreign investors can enter and exit smoothly, while high gross FDI indicates that India continues to remain an attractive investment destination.

External commercial borrowings and non-resident deposits, on the other hand, witnessed higher net inflows compared to the previous year. As on May 30, 2025, India’s foreign exchange reserves stood at $691.5 billion. These are sufficient to fund more than 11 months of goods imports and about 96% of external debt outstanding. “Overall, India’s external sector remains resilient as key external sector vulnerability indicators continue to improve. We remain confident of meeting our external financing requirements,” RBI governor said.