India’s trade momentum remains firm despite global volatility, and the current account is expected to slip into a modest deficit before returning to positive territory later in the fiscal, SBI Research said in a report on Saturday.
According to the report, the current account deficit (CAD) is projected to be about 1.8 per cent and 2.8 per cent of GDP in Q2 and Q3 of FY26, respectively, before turning positive in Q4 FY26. The full-year CAD is estimated to remain in the range of 1–1.3 per cent of GDP, with the overall balance of payments likely to show a marginal deficit of up to USD 10 billion during the fiscal.
“Even though the balance of payments (BOP) will turn negative in FY26, the alarm bells being sounded regarding its impact on rupee movements appear a little overblown at this point,” the report stated.
India’s total merchandise exports during April–September of FY26 rose 2.9 per cent to USD 220 billion. Shipments to the United States grew 13 per cent to USD 45 billion despite front-loading effects and a decline in the US share in exports since July 2025.
SBI Research said marine products and readymade garments (RMG) — cotton — recorded positive growth during the April–September period. It added that the share of India’s merchandise exports to other countries increased markedly, indicating diversification of the export basket, with the UAE, China, Vietnam, Japan, Hong Kong, Bangladesh, Sri Lanka and Nigeria emerging as key destinations across different product categories.
The report also highlighted government-led support for exporters, including the recent approval of ₹45,060 crore, which comprises ₹20,000 crore in credit guarantees on bank loans. The move aims to enhance the global competitiveness of Indian exporters and facilitate entry into new and emerging markets.
SBI Research noted that the rupee’s fall past 89.49 reflected global financial market turbulence and a strengthening dollar index, and does not suggest structural weakness in the currency.
—IANS