India recorded a balance of payments (BoP) surplus of $66.8 billion during the first half of financial year 2026-27, marking a significant turnaround from the $6.4 billion deficit reported in the corresponding period last year. The improvement was driven primarily by a sharp increase in banking capital inflows, particularly non-resident Indian (NRI) deposits, according to preliminary data released by the Reserve Bank of India (RBI) on November 13, 2026.
The strong overall surplus came despite a widening current account deficit, which increased to $25.8 billion during April-September FY27 from $18 billion a year earlier. A larger merchandise trade deficit and higher net income outflows weighed on the current account, but these pressures were more than offset by the substantial capital account surplus. The latest figures highlight the important role of foreign currency deposits and banking flows in supporting India’s external financial position.
India’s BoP Surplus Rises to $66.8 Billion
The RBI’s preliminary balance of payments data showed that India’s overall BoP position improved by $73.2 billion compared with the first half of FY26.
The country moved from a deficit of $6.4 billion in April-September 2025 to a surplus of $66.8 billion in the same period of 2026.
The primary reason was the expansion in the capital account surplus, which increased to $92.6 billion from $11.6 billion in the year-ago period.
| Balance of payments indicator | H1 FY26 | H1 FY27 |
|---|---|---|
| Current account balance | -$18.0 billion | -$25.8 billion |
| Capital account balance | $11.6 billion | $92.6 billion |
| Overall BoP balance | -$6.4 billion | $66.8 billion |
The figures show that India’s external position benefited substantially from capital inflows, even as its trade and income-related payments created greater pressure on the current account.
A BoP surplus generally indicates that foreign currency inflows have exceeded outflows across the country’s external transactions during the reporting period. It is different from a current account surplus, which measures trade, services, income and transfer transactions.
NRI Deposit Inflows Drive Capital Account Surplus
Banking capital emerged as the biggest contributor to India’s improved BoP position.
Net banking capital inflows reached $125.2 billion during H1 FY27, compared with just $0.3 billion in the corresponding period last year.
Within this category, net NRI deposit inflows stood at $125.6 billion, substantially higher than the $6.1 billion recorded in H1 FY26.
The inflows were supported by foreign currency deposits maintained by non-residents with Indian banks, including deposits mobilised through the RBI’s dedicated dollar mobilisation programme.
Foreign currency non-resident bank (FCNR-B) deposits allow eligible non-resident Indians to hold foreign currency-denominated deposits with Indian banks. These deposits can provide banks with access to foreign currency funding while offering depositors an opportunity to keep their savings in supported foreign currencies.
The sharp increase in these deposits helped expand the capital account surplus to $92.6 billion.
However, the scale of the inflows also means that the headline BoP surplus was heavily dependent on banking-related capital movements rather than an improvement in India’s merchandise trade balance.
Current Account Deficit Widens to $25.8 Billion
While the overall BoP position improved, India’s current account deficit widened during the first half of FY27.
The CAD increased to $25.8 billion from $18 billion in H1 FY26, primarily because imports grew faster than exports and the merchandise trade deficit expanded.
Merchandise exports increased to $265.3 billion from $221.5 billion in the previous year. However, merchandise imports rose more sharply to $441.4 billion from $379.6 billion.
As a result, the merchandise trade deficit widened to $176.1 billion from $158.1 billion.
| Merchandise trade indicator | H1 FY26 | H1 FY27 |
|---|---|---|
| Merchandise exports | $221.5 billion | $265.3 billion |
| Merchandise imports | $379.6 billion | $441.4 billion |
| Merchandise trade deficit | $158.1 billion | $176.1 billion |
The increase in imports reflects the country’s continued demand for foreign goods, including energy, industrial inputs, machinery and other products. Although exports also expanded, their growth was not sufficient to offset the increase in import expenditure.
The widening trade deficit therefore remained the biggest source of pressure on India’s current account.
Services Exports and Remittances Provide Support
India’s services trade continued to provide an important cushion against the merchandise trade deficit.
Net services exports increased to $105 billion in H1 FY27, compared with $98.8 billion in the corresponding period last year.
Services exports rose to $219.3 billion from $199 billion, while services imports increased to $114.3 billion from $100.2 billion.
Net transfers, which include remittances sent by Indians working overseas, also improved. The category recorded $77.7 billion in H1 FY27, compared with $67.2 billion a year earlier.
These inflows helped offset some of the pressure created by the merchandise trade deficit.
However, the net income deficit widened to $32.4 billion from $25.8 billion. Income payments include items such as interest, dividends and other investment-related earnings transferred abroad.
The increase in net income outflows added another source of pressure to the current account.
Foreign Investment and External Borrowing Show Mixed Trends
Other components of the capital account recorded a mixed performance during the first half of FY27.
Net foreign direct investment (FDI) inflows stood at $8.8 billion, compared with $7.4 billion in H1 FY26. This indicated a modest improvement in net direct investment flows.
Foreign portfolio investment (FPI), however, recorded net outflows of $10.4 billion, compared with outflows of $4.1 billion a year earlier.
External commercial borrowings (ECBs) also recorded net outflows of $40.6 billion, reversing the net inflows of $7.2 billion reported in the corresponding period last year.
| Capital account component | H1 FY26 | H1 FY27 |
|---|---|---|
| Net FDI | $7.4 billion | $8.8 billion |
| Net FPI | -$4.1 billion | -$10.4 billion |
| Net external commercial borrowings | $7.2 billion | -$40.6 billion |
| Net banking capital | $0.3 billion | $125.2 billion |
| Net NRI deposits | $6.1 billion | $125.6 billion |
The figures show that banking capital inflows played a much larger role in supporting India’s external position than portfolio investment or external commercial borrowing during the period.
The increase in FPI outflows also highlights the importance of monitoring foreign investor sentiment and global financial conditions.
September BoP Records an $8.8 Billion Surplus
The RBI’s data also showed that India’s BoP position remained positive in September 2026.
The country recorded an overall surplus of $8.8 billion during the month, compared with a deficit of $5.6 billion in September 2025.
The September current account deficit stood at $7.4 billion, wider than the $5.2 billion deficit reported a year earlier.
The merchandise trade deficit narrowed to $30 billion from $33.4 billion, while net services exports increased to $19.2 billion from $18.8 billion.
On the capital account, India recorded net inflows of $16.2 billion, supported by banking capital inflows of $22.2 billion.
Net FPI outflows reached $6.7 billion, while net FDI recorded outflows of $4.9 billion during September.
The monthly surplus was lower than the $45.4 billion recorded in August, indicating that the exceptionally strong first-half result was not evenly distributed across the six months.
The Bigger Picture
India’s $66.8 billion BoP surplus demonstrates how capital inflows can strengthen the country’s external financial position even when the current account remains under pressure. Strong NRI deposit mobilisation provided substantial support during H1 FY27, offsetting the effects of a larger merchandise trade deficit and increased income outflows.
However, the composition of the surplus matters. Banking capital inflows, particularly NRI deposits, were unusually large compared with the previous year. Such flows can be influenced by interest-rate differences, exchange-rate expectations, deposit incentives and international financial conditions. They should not automatically be treated as a permanent source of external financing.
The widening current account deficit also remains an important indicator for policymakers. India’s ability to expand exports, maintain strong services receipts and attract stable long-term investment will influence the sustainability of its external position. A healthy BoP position is important for maintaining confidence in the rupee and reducing pressure on foreign exchange reserves.
Looking Ahead
India’s external position entered the second half of FY27 with a substantial cumulative BoP surplus, supported by exceptional banking capital inflows. The September surplus of $8.8 billion also indicated that the overall balance remained positive, although the monthly contribution was considerably smaller than the August figure. Future trends will depend on capital flows, remittances, services exports, merchandise trade and the country’s external borrowing requirements.
The key question for the coming quarters will be whether India can maintain a comfortable BoP position without relying disproportionately on large deposit inflows. Stronger exports, stable foreign investment and resilient services earnings could help reduce pressure from the merchandise trade deficit. The RBI will also continue monitoring foreign exchange movements and capital flows as it manages the country’s external stability.
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