India’s Balance of Payments with a US Dollars 30.8 billion in 2025-26 marks outflows exceeding inflows from trade and investment, a six times jump from the previous year. The Reserve Bank of India (RBI) said it was concerned about foreign exchange in dollars flowing out of the country. The annual report released on 29th May 2026 shows that the Balance of Payment deficit grew in 2025-26 because of a sharp fall in net foreign investments into India and this compounded a widening trade deficit. The overall Balance of Payments is a combination of the Current Account and the Capital Account. The Current Account captures India’s trade in goods and services as well as some cross-border financial transactions. The capital account largely deals with investments, both direct and portfolio, external borrowings, external assistance, and asset transfers. 

India’s overall merchandise trade deficit — the amount that imports exceeded exports — stood at US Dollars 251.6 billion in 2025-26, down from US Dolars 286.9 billion in the previous year. On the other hand, the surplus on India’s ‘invisibles’ trade, which includes the services trade, fell to US Dollars 221.4 billion in 2025-26 from US Dollars 263.9 in 2024-25. In 2025-26, the capital account surplus shrank to US Dollars 72 million, down more than 99.5% over the US Dollars 16.6 billion seen in 2024-25. Indians have been parking their funds abroad and payments related to trade, even though the financial year 2025-26 included just one month of the ongoing crisis in West Asia. Delayed export receipts, advance payments for imports, and net funds held abroad, stood at a deficit of US Dollars 22.6 billion in 2025-26, up from a deficit of US Dollars 7.4 billion in the previous year.

The capital account deficit was aggravated by foreign portfolio investors (FPIs) pulling out US Dollars 4.3 billion more in 2025-26 than they put in. The government has in May 2026 hiked the import duty on gold and silver to 15% from the previous 6%, and also restricted the import of most kinds of silver. Further, oil marketing companies have hiked the prices of petrol and diesel by an average of Rupees 7.5 per litre each over four tranches starting May 15.