Robust Services Exports Drive India’s $13.5 B Current Account Surplus in Jan

India had a current account surplus of $13.5 billion—or 1.3% of GDP—during the January to March quarter of FY 2024-25, as per figures published by the Reserve Bank of India (RBI) on Friday.

This represents a radical reversal of the $11.3 billion deficit (1.1% of GDP) for the last quarter (October–December 2024). It also doubles the previous year's surplus of $4.6 billion (0.5% of GDP) for the same period.

For the whole fiscal year 2024-25, India's current account deficit reduced to $23.3 billion (0.6% of GDP), from $26 billion (0.7% of GDP) in 2023-24. The RBI had ascribed this upsurge mainly to higher net receipts under invisibles—predominantly consisting of services and personal transfers.

While merchandise exports saw some softening, the fourth-quarter surplus was underpinned by a strong increase in services exports and a less significant net outflow on the primary income account.

Net services receipts increased to $53.3 billion during Q4 FY25 compared to $42.7 billion in the same quarter of the last year. Strong performance in major segments such as business and computer services led the growth, the central bank said.

Key income outlays, which primarily express returns on foreign investments in India, fell to $11.9 billion from $14.8 billion in Q4 FY24. While this, simultaneously, personal transfer receipts—comprising remittances from Indian workers abroad—rose to $33.9 billion in Q4, from $31.3 billion in the prior-year Q4.

On the capital account front, foreign direct investment (FDI) infused a net income of $0.4 billion in Q4 FY25, lower than $2.3 billion a year earlier. Foreign portfolio investment (FPI), however, experienced a net outflow of $5.9 billion in the quarter, as against a net inflow of $11.4 billion in Q4 FY24.

External commercial borrowings (ECBs) increased hugely, with net inflows of $7.4 billion in Q4 FY25, as against $2.6 billion during the corresponding quarter last year. Net inflows by way of non-resident Indian (NRI) deposits amounted to $2.8 billion, down from $5.4 billion for Q4 FY24.

India's foreign exchange reserves increased by $8.8 billion in Q4 FY25 on a balance of payments basis, although this was significantly less than the $30.8 billion increase witnessed in the fourth quarter of FY24.

During the entire fiscal year, net FDI inflows were $1.0 billion—well short of the $10.2 billion in FY24. FPI inflows also decreased to $3.6 billion in 2024-25 from a steep $44.1 billion in the last financial year.