India's current account deficit narrows sharply on higher exports before 50% US tariffs took effect

India's current account deficit was at $2.4 billion in April-June vs $8.6 billion in the year-ago period. It was in a surplus of $13.5 billion in January-March.

India's current account deficit narrowed sharply in April-June 2025, before 50% US tariffs on exports took effect.

The deficit was at $2.4 billion in April-June as against $8.6 billion in the year-ago period, according to data released by the Reserve Bank of India (RBI) on Monday, helped by an increase in service sector exports—up 21% to $47.9 billion—and larger than anticipated remittances. The current account had a surplus of $13.5 billion in the previous quarter.

A current account deficit indicates that a country is importing more than it's exporting. A surplus means exports are higher than imports.

“Front-loaded exports to the US and continuously healthy service exports helped lower the fiscal first quarter deficit,” Madhavi Arora, lead economist at Emkay Global Financial Services Ltd., said in a note. “However, payback from last quarter and tariff-led hit to labour-intensive sectors could imply the FY26 deficit could cross 1.2% of GDP with further upside risks.”

US President Donald Trump’s punitive 50% tariffs on India are now among the highest in Asia, leaving Indian goods uncompetitive in the American market. The US is India’s biggest export destination, accounting for a fifth of the country’s total merchandise exports in the year through March 2025, when the South Asian nation shipped $87.4 billion worth of goods.

Personal transfer receipts, mainly representing remittances, rose to $33.2 billion from $28.6 billion a year ago, the RBI said.