India’s trade deficit may surge to $300 bn in FY26: Report

According to a recent analysis by ICICI Bank, despite the expectation that oil prices will remain reasonable, India’s trade imbalance is predicted to increase to $300 billion in the fiscal year 2025–2026. Compared to the $287 billion in FY25 and $245 billion in FY24, the anticipated deficit would be 7.0% of the nation’s GDP. With the help of monetary and fiscal stimulus programs, India’s economy is predicted to remain robust in spite of this. The survey also pointed out that industries including services, exports, and domestic travel are still growing, and rural demand is holding up nicely.

The report also expects services exports and remittances to remain steady in FY26. However, growth in these areas could slow down, mainly because of weaker demand from the US. Taking these factors into account, the report projects India’s current account deficit (CAD) to stand at USD 30 billion in FY26, which is 0.7 per cent of GDP.

In FY25, India’s trade deficit rose to $287 billion, up from $245 billion in FY24, due to a 6.2 per cent increase in imports. While exports in the current fiscal year have shown a modest growth of 3.1 per cent year-on-year so far, this rise is largely led by a strong 22 per cent increase in exports to the US, whereas exports to other countries declined by 1.2 per cent. Despite the challenges in global trade and expected pressure on exports, the report remained optimistic about India’s external position. It said, “FPI and FDI inflows should see improvement as the domestic growth cycle is improving. Overall, BoP to see a mild surplus”.