India Current Account Gap Widens As Trump Tariff Hits Exports
JustinIndia's current account deficit widened in the July–to-September quarter as US President Donald Trump's 50% tariff hurt the country's exports.
India's current account deficit widened in the July–to-September quarter as US President Donald Trump's 50% tariff hurt the country's exports.
The shortfall in the broadest measure of trade in goods and services was $12.3 billion, or 1.3% of gross domestic product in the three months, according to Reserve Bank of India data released Monday. The gap was smaller than the median forecast of a $15.4 billion gap in a Bloomberg survey on strong remittances and services exports. It stood at $2.7 billion in the April-to-June period.
Gold prices surged, pushing up import costs, while exports remained under pressure from the 50% tariff imposed by Trump, partly in response to India's Russian oil purchases. The wider current account gap may put additional pressure on the rupee, which slid to a record low of 89.64 per dollar on Monday.
"Looking ahead, the spike in gold imports in October 2025 is likely to bloat the ongoing quarter's current account deficit considerably to above 2.5% of GDP," said Aditi Nayar, chief economist at ICRA Ltd.
The merchandise trade gap in the quarter narrowed slightly to $87.4 billion, from $88.5 billion a year ago, the RBI data showed. Services exports climbed to $50.9 billion, from $44.5 billion a year earlier mainly because of computer services, the central bank said.
Private transfer receipts, mainly representing remittances by Indians employed overseas, amounted to $38.2 billion, up from $34.4 billion from the corresponding period a year earlier.
Net foreign direct investment recorded a net inflow of $2.9 billion, compared with a net outflow of $2.8 billion a year ago. Foreign portfolio investment recorded net outflow of $5.7 billion against a net inflow of $19.9 billion in the year-ago quarter.
