India’s current account deficit (CAD) for FY27 is projected to be around 2.1% of GDP, based on an estimated oil price of $85 per barrel, as per a report by HDFC Bank. The report highlights that high crude oil prices and potential disruptions in the Strait of Hormuz could pose risks to this forecast. Measures to reduce gold imports may help offset the deficit, with a potential 10 basis points decrease if gold volumes decline by 20%.
India witnessed a widening merchandise trade deficit of $28.4 billion in April 2026, driven by a notable increase in imports surpassing export growth. The country’s import bill rose by 10% year-on-year, primarily due to higher gold and core imports like electronics. On the other hand, services exports exhibited a robust 13.4% growth in April, contributing to a narrower combined goods and services deficit of $7.8 billion.
Services exports displayed a positive momentum, expanding by 13.4% in April, leading to a net services exports increase to $20.6 billion. The oil import bill slightly rose to $18.6 billion in April, with India’s crude oil import basket priced at approximately $114 per barrel. To secure oil supply amidst supply constraints from the Strait’s closure, India augmented procurement of Russian Urals following a temporary waiver of US sanctions.
The report also noted a significant 34% year-on-year increase in oil exports, which helped in managing the net oil import bill. Trade patterns shifted due to disruptions in West Asia, with imports from Saudi Arabia surging by 30.3% while imports from the UAE, Qatar, Kuwait, and Iraq saw declines. Notably, exports to the UAE dropped by 36% year-on-year, while exports to Singapore spiked by 180%, indicating a potential redirection of trade flows through alternative transshipment hubs.
