India’s services trade surplus nearing record $207 bn in FY26

New Delhi: While merchandise exports are projected to remain under pressure due to US tariffs, India’s services trade surplus is expected to hit a record $205–207 billion in FY26, a report showed on Wednesday. The country’s current account deficit (CAD) narrowed sharply to $2.4 billion (0.2 per cent of GDP) in Q1 FY26, significantly lower than the $8.6 billion deficit (0.9 per cent of GDP) recorded in Q1 FY25.

The outcome was also well below ICRA’s earlier forecast of 0.7 per cent of GDP, primarily aided by stronger-than-expected remittances and a higher services trade surplus. Earnings from invisibles rose 19.9 per cent (year-on-year) to $66.1 billion in Q1 FY26, offsetting the merchandise trade deficit of $68.5 billion.

ICRA cautions that the CAD is set to widen in Q2 FY26 to $13–15 billion (1.5 per cent of GDP), driven by a sharp expansion in the merchandise trade deficit.