
India's Balance of Payments Swings Positive in Q4 FY25 on Strong Services, Remittances

- India recorded a $13.5 billion current account surplus (1.3% of GDP) in Q4 FY25, driven by strong services exports and remittances.
- Merchandise trade deficit narrowed to $59.5 billion, while net services receipts rose to $53.3 billion.
- Full-year FDI and FPI inflows declined sharply, with forex reserves depleting by $5 billion in FY25.
India posted a current account surplus of US$ 13.5 billion, or 1.3% of GDP, in the fourth quarter of FY 2024-25, marking a strong turnaround from a deficit of US$ 11.3 billion (1.1% of GDP) in Q3. The surplus also reflects a significant improvement over the US$ 4.6 billion (0.5% of GDP) surplus recorded in the same quarter last year, according to the latest update from the Reserve Bank of India (RBI).
The improvement in the current account was driven by a robust performance in the services sector and higher remittance inflows. Net services receipts rose sharply to US$ 53.3 billion in Q4 FY25, up from US$ 42.7 billion a year earlier, buoyed by strong year-on-year growth in business and computer services exports.
Although the merchandise trade deficit widened on a year-on-year basis to US$ 59.5 billion from US$ 52.0 billion, it moderated significantly from the US$ 79.3 billion deficit reported in Q3 FY25, contributing to the overall current account surplus.
The primary income outgo, mainly investment-related payments, eased to US$ 11.9 billion from US$ 14.8 billion a year ago. Meanwhile, personal transfer receipts, primarily remittances from Indians abroad, climbed to US$ 33.9 billion, up from US$ 31.3 billion in Q4 FY24.
In the financial account, foreign direct investment (FDI) saw a sharp decline with net inflows of just US$ 0.4 billion in Q4 FY25, compared to US$ 2.3 billion a year ago. Foreign portfolio investment (FPI) turned negative, registering a net outflow of US$ 5.9 billion, against a net inflow of US$ 11.4 billion in the same period last year.
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External commercial borrowings (ECBs) to India surged to US$ 7.4 billion, up from US$ 2.6 billion a year earlier, while non-resident deposits slowed to US$ 2.8 billion, down from US$ 5.4 billion.
On a full-year basis, India’s current account deficit (CAD) narrowed to US$ 23.3 billion (0.6% of GDP) in FY25, from US$ 26.0 billion (0.7% of GDP) in FY24, mainly due to higher net invisibles such as services and remittances. However, net FDI inflows dropped sharply to US$ 1.0 billion from US$ 10.2 billion, and FPI inflows fell to US$ 3.6 billion from US$ 44.1 billion. The year also saw a depletion of US$ 5.0 billion in forex reserves on a balance of payments basis.