Union Bank warns of rising CAD risks
India's current account deficit (CAD) is expected to almost double in the current financial year, reaching 1.2% of GDP in FY26 compared to 0.6% in FY25, according to a Union Bank of India report.
The trade gap also widened sharply in July 2025, signaling more pressure on the country's finances.
US tariffs could hit India's exports
A recent 50% hike in US tariffs (from August 27) is expected to disrupt Indian exports—especially textiles, gems and jewelry, auto components, chemicals, and shrimps.
Plus, India's CAD is highly sensitive to oil prices; even a $10 per barrel swing can shift the annual deficit by $15 billion.
Services exports and remittances are doing well
On the bright side, India's services exports grew to $97.4 billion and remittances hit $33.2 billion in Q1 FY26.
These inflows have helped bring the CAD down to just $2.4 billion so far this year—but ongoing global tensions mean things could still get tricky ahead.