The country’s external position showed significant improvement following central bank policy measures to strengthen foreign exchange reserves.
The current account deficit narrowed to $5.2 billion in August 2026 from $6.1 billion in August 2025. This improvement was supported by a reduction in the merchandise trade deficit, which fell to $26.6 billion as exports reached $44.7 billion against imports of $71.3 billion. Net services receipts also grew to $16.5 billion in August, driven by $35.5 billion in total service exports.
Net transfers, which include overseas, rose to $12.8 billion in August from $12.2 billion in the same month last year. For the April–August 2026 period, cumulative net transfers reached $66.8 billion.
The capital account recorded massive net inflows of $50.6 billion in August 2026, compared with inflows of just $0.5 billion in August 2025. Foreign direct investment into India stood at $5.2 billion, yielding a net FDI inflow of $3.3 billion for the month. Meanwhile, foreign portfolio investment turned positive, posting net inflows of $1.7 billion compared to outflows of $2.6 billion a year earlier.
Banking capital saw a dramatic surge, generating net inflows of $64.7 billion in August. This expansion was predominantly driven by Non-Resident Indian (NRI) deposit schemes, which attracted $83.0 billion in net inflows during the month, bringing the April–August NRI deposit total to $119.2 billion.
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