India's current account deficit could touch 1% of GDP
India's current account deficit (CAD) could top 1% of GDP in fiscal year 2026 if the US keeps its steep 50% tariffs through March.
That means India might see lower exports and a bigger trade gap.
For context, CAD was at 0.6% of GDP in FY25, slightly down from 0.7% the year before, thanks to higher net invisibles receipts, including remittances.
CAD in Q1 FY26
In Q1 FY26, India's CAD was $2.4 billion (0.2% of GDP)—not as good as last quarter's $13.5 billion surplus but better than the $8.6 billion deficit a year ago.
The trade deficit grew to $68.5 billion compared to last year, but an 18% jump in remittances ($33.2 billion) helped soften the blow.
Rupee's performance against dollar
By early September 2025, the rupee had slipped about 3.2% against the dollar—making it one of Asia's weaker performers lately.
ICRA Ratings thinks USD/INR will hover between 87 and 89 for now but warns that new tariffs or global tensions could shake things up even more.