The widening deficit was driven mainly by a higher merchandise trade gap, even as services exports and remittances remained strong.
The merchandise trade deficit expanded to $93.6 billion in Q3 FY26 from $79.3 billion a year ago. Goods exports stood at $111.7 billion, while imports rose to $205.3 billion during the quarter.
Net services receipts improved to $57.5 billion from $51.2 billion in Q3 FY25. The RBI said services exports increased year-on-year in major categories such as computer services and other business services.
The net outgo under the primary income account, which reflects investment income payments, declined to $12.2 billion from $16.4 billion a year earlier.
Under the secondary income account, personal transfer receipts, mainly remittances by Indians employed overseas, rose to $36.9 billion from $35.1 billion in the year-ago quarter. Net secondary income stood at $35.2 billion in Q3 FY26.
In the financial account, foreign direct investment (FDI) recorded a net outflow of $3.7 billion during the quarter, higher than the net outflow of $2.8 billion a year ago. Foreign portfolio investment (FPI) saw a marginal net outflow of $0.2 billion, lower than the $11.4 billion net outflow in Q3 FY25.Non-resident Indian (NRI) deposits recorded a net inflow of $5.1 billion, compared with $3.1 billion a year ago. Net inflows under external commercial borrowings (ECBs) stood at $3.3 billion, lower than $4.4 billion in the corresponding quarter last year.
Foreign exchange reserves declined by $24.4 billion on a balance of payments basis in Q3 FY26, compared with a depletion of $37.7 billion in Q3 FY25.
BoP in April-December period
For the April–December 2025 period, the current account deficit moderated to $30.1 billion (1.0% of GDP) from $36.6 billion (1.3% of GDP) in the same period of the previous year.
Net invisibles receipts rose to $221.5 billion during April–December 2025 from $191.0 billion a year ago, driven by higher net services receipts and personal transfers.
Net FDI inflows increased to $3.0 billion in April–December 2025 from $0.6 billion in the year-ago period. However, FPI recorded net outflows of $4.3 billion compared with net inflows of $9.4 billion a year earlier.
During April–December 2025, foreign exchange reserves declined by $30.8 billion on a BoP basis, higher than the depletion of $13.8 billion in the corresponding period of the previous year.