India's Current Account Deficit Narrows to $30.1 Billion in April-December 2025: RBI

India's current account deficit moderated to $30.1 billion, or 1 percent of GDP, during April-December 2025 — down from $36.6 billion in the corresponding period a year ago — according to data released by the Reserve Bank of India on Monday. The improvement reflects a healthier external balance, though rising forex reserve depletion and foreign portfolio outflows temper the overall picture.

Net foreign direct investment inflows rose sharply to $3 billion in April-December 2025, a significant jump from $0.6 billion recorded in the same period a year earlier — signalling renewed confidence among long-term investors in India's economic fundamentals.

Foreign portfolio investment, however, told a starkly different story. FPI recorded net outflows of $4.3 billion during the period, reversing net inflows of $9.4 billion in the corresponding period of the previous year — a swing of over $13 billion that reflects broader global risk aversion and capital reallocation away from emerging markets.

India's foreign exchange reserves depleted by $30.8 billion on a Balance of Payments basis during April-December 2025 — more than double the depletion of $13.8 billion recorded in the same period a year ago. The accelerated drawdown underlines the pressure the RBI has faced in managing currency volatility amid global headwinds.

The RBI's report — titled 'Developments in India's Balance of Payments during the Third Quarter (October-December) of 2025-26' — highlighted a positive trend in services exports, which rose on an annual basis across major categories including computer services and other business services. The sustained strength of India's services sector remains a key pillar supporting the country's external account position.