India Balance of Payments Surplus Hits $20.8 Billion in July

The Reserve Bank of India reported a balance of payments surplus of $20.8 billion for July 2026, a sharp increase from the $0.3 billion surplus recorded in July 2025. This growth was primarily fueled by a capital account inflow of $27.7 billion, which included $33.5 billion in net deposits from the Indian diaspora and $18.4 billion in banking capital. Other contributors included $7.3 billion in foreign direct investment and $4.1 billion in foreign portfolio investment, though external commercial borrowings saw a net outflow of $2.3 billion.

The surge in capital is attributed to a dollar-mobilisation programme launched in June to attract foreign-exchange deposits. The programme offered discounted hedging for state-run companies and banks, and free hedging for banks raising foreign-exchange deposits. Between June 5 and August 31, the central bank received $136.4 billion through these measures, with non-resident deposits accounting for $127 billion.

Conversely, India's current account deficit widened to $7 billion in July, more than double the $3.2 billion deficit from the previous year. This was driven by a merchandise trade deficit of $31.7 billion, as imports rose to $76.8 billion and outpaced export growth. For the April-July period of FY27, the total current account deficit reached $11.2 billion, compared to $6.6 billion during the same period last year.