The merchandise trade deficit widened to USD 30.2 bn in Sep-26 from USD 26.9 bn in Aug-26, driven predominantly by higher oil and non-oil non-gold imports
Download ReportQuantEco Research | Merchandise Trade & BoP | Trade Pressures Mount, Capital Flows Offer Respite
India’s external sector continues to navigate a complex interplay of resilient trade flows, elevated geopolitical risks and shifting capital flow dynamics. The merchandise trade deficit widened to USD 30.2 bn in Sep-26 from USD 26.9 bn in Aug-26, driven predominantly by higher oil and non-oil non-gold imports, even as non-oil exports scaled a record high, underscoring the underlying resilience of export demand. Meanwhile, the BoP registered a sizeable surplus of USD 45.4 bn in Aug-26, buoyed by exceptional capital inflows under the RBI’s special window. Looking ahead, India’s external account presents a tale of two contrasting forces — a current account increasingly vulnerable to elevated crude prices and geopolitical frictions, juxtaposed against a capital account benefiting from extraordinary inflows. Against this backdrop, we retain our FY27 CAD forecast at USD 45 bn (~1.1% of GDP), with risks tilted to the upside should crude prices remain above USD 100 pb on a sustained basis. Concurrently, we maintain our FY27 BoP surplus projection at USD 120 bn, while acknowledging significant downside risks. With the FCNR(B) window shut, RBI’s FCA down USD 43 bn in the four weeks to 2nd Oct-26, Fed tightening weighing on portfolio flows and crude oil prices back above USD 100 pb, the BoP momentum is likely to moderate substantially in the coming months.