India’s July current account deficit doubles to $7 billion, but BoP surplus jumps

India’s current account deficit widened sharply in July, driven by a larger merchandise trade gap, even as strong capital inflows helped the country post a significantly higher balance of payments surplus, according to data released by the Reserve Bank of India on Tuesday.The current account deficit stood at $7 billion in July, compared with $3.2 billion a year earlier. For the April-July period, the deficit widened to $11.2 billion from $6.6 billion in the year-ago period.The merchandise trade deficit was the biggest drag, widening to $31.7 billion in July from $28.2 billion a year earlier. Merchandise exports rose to $45.1 billion from $37.4 billion, but imports climbed more sharply to $76.8 billion from $65.6 billion.Services provided some offset, with net services receipts rising to $17.6 billion from $16.4 billion. Net transfers also increased to $13.2 billion from $12.6 billion.The capital account, however, saw a sharp improvement. Net capital inflows jumped to $27.7 billion in July from $3.5 billion a year earlier. This helped push the overall balance of payments surplus to $20.8 billion, compared with just $0.3 billion in July 2025.Banking capital was a major contributor, rising to $18.4 billion from $6 billion. NRI deposits accounted for a particularly large part of the inflows, with net deposits surging to $33.5 billion from just $1 billion a year earlier.Net foreign direct investment also strengthened to $7.3 billion from $4.5 billion. Portfolio flows turned positive at $4.1 billion, compared with a net outflow of $2.5 billion a year earlier.Also Read: August trade data: India exports jump 26% to record monthly high; trade deficit narrowsFor April-July, the overall balance of payments surplus stood at $12.7 billion, up from $4.8 billion a year earlier, despite the wider current account deficit.So, the key takeaway is: India’s current account position has weakened on the back of a wider trade deficit, but strong capital inflows — particularly NRI deposits — have more than offset that pressure at the overall BoP level.

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