ICICI Bank Global Markets warned on May 16 that India’s current account deficit could climb to 1.5–2 per cent of GDP this fiscal year, as crude oil hovers near USD 100 per barrel and gold imports recorded an 18-month high in April. The alert comes as April trade data reveals a goods trade deficit that widened sharply to USD 28.4 billion, up from USD 20.7 billion just a month earlier.
Exports Posted a Strong April, But the Import Bill Came in Heavier
India’s goods exports rose 14 percent year-on-year to USD 43.6 billion in April, a solid start to FY27. Oil exports led, jumping 35 percent YoY to USD 9.6 billion, the sharpest growth in roughly two years, aided by elevated global prices and an 85 percent sequential surge from March. Non-oil exports recovered to USD 34 billion, up 9 percent annually.
Electronics was the clear standout, hitting an all-time high of USD 5.2 billion, up 40 percent YoY. Engineering goods expanded 8.8 percent YoY, and chemicals grew 7.2 percent. On the other side, ceramics and glassware collapsed 41 percent YoY, with gems and jewellery, textiles, and agricultural products also contracting.
Regionally, exports to non-US markets surged 17 per cent YoY to USD 35 billion, led by China, Hong Kong, Singapore, the UK, and Germany. Exports to the US grew modestly, just 1.1 percent YoY to USD 8.5 billion, suggesting gradual tariff normalization rather than any real acceleration. West Asia was the outlier: exports there fell 28 percent YoY, directly tied to the ongoing blockade of the Strait of Hormuz. That’s not a background risk anymore; it’s showing up clearly in the numbers.
Export Breakdown — April FY27
| Segment | Value (USD B) | YoY Change | Note |
|---|---|---|---|
| Total goods exports | 43.6 | +14% | Strong FY27 start |
| Oil exports | 9.6 | +35% | 2-year high |
| Non-oil exports | 34.0 | +9% | Monthly recovery |
| Electronics exports | 5.2 | +40% | All-time high |
| US exports | 8.5 | +1.1% | Tariff normalization |
| Non-US exports | 35.0 | +17% | China, UK, Singapore led |
| West Asia exports | — | −28% | Strait of Hormuz blockade |
Gold and Oil Imports Are Where the Pressure Is Building
Total goods imports rose 10 per cent YoY to USD 71.9 billion. Gold imports surged 82 percent YoY to USD 5.6 billion. Oil imports fell 10 percent YoY on base effects but jumped 53 percent month-on-month to USD 18.6 billion, the highest in 12 months, as global crude climbed to approximately USD 105 per barrel in April. Electronics and machinery imports hit record highs, together accounting for nearly 27 percent of the total goods import bill.
What stood out was how quickly the services buffer is being tested. Net services exports grew 29 percent YoY to USD 20.6 billion in April, above FY26’s monthly average of USD 18.1 billion, but the swing in merchandise trade was too large to offset. The overall goods and services balance moved from a mild surplus of USD 0.3 billion in March to a deficit of USD 7.8 billion in April.
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Import Breakdown — April FY27
| Segment | Value (USD B) | YoY Change | Note |
|---|---|---|---|
| Total goods imports | 71.9 | +10% | Broad-based rise |
| Gold imports | 5.6 | +82% | 18-month high |
| Oil imports | 18.6 | −10% YoY / +53% MoM | 12-month high in absolute terms |
| Non-oil non-gold imports | 47.7 | +15% | Demand-driven |
| Electronics and machinery | ~19.4 | Record | 27% of total import bill |
Trade Balance — April FY27
| Metric | April FY27 | March FY27 | Change |
|---|---|---|---|
| Goods trade deficit | USD 28.4B | USD 20.7B | Widened sharply |
| Oil deficit | USD 9.0B | — | Expanded MoM |
| Non-oil non-gold deficit | USD 13.7B | — | Expanded MoM |
| Net services exports | USD 20.6B | — | +29% YoY, above FY26 avg |
| Goods and services balance | −USD 7.8B | +USD 0.3B | Surplus flipped to deficit |
India Current Account Deficit Forecast and What the RBI Will Be Watching
ICICI Bank Global Markets projects India’s current account deficit at 1.5–2 percent of GDP for FY27, assuming oil averages around USD 100 per barrel and non-essential imports are kept in check. India’s FY26 CAD came in at approximately 1.0–1.1 percent of GDP, meaning this year’s forecast represents a near-doubling of the external financing burden. That is a number the Reserve Bank of India will be tracking closely.
A wider India current account deficit combined with FPI outflows, ICICI Securities puts net foreign portfolio outflows at USD 10 billion in FY27 to date, placing direct pressure on the rupee and India’s balance of payments position. The RBI has been managing USD/INR carefully, but a sustained current account deficit at 2 percent of GDP historically requires either strong capital inflows or active intervention to prevent meaningful rupee depreciation. The timing of that return depends heavily on how the West Asia conflict and US tariff trajectory evolve over the next two quarters.
Macro Indicators Snapshot
| Indicator | Figure | Period |
|---|---|---|
| India current account deficit forecast | 1.5–2% of GDP | FY27 |
| FY26 CAD actual | ~1.0–1.1% of GDP | FY26 |
| FPI outflows | USD 10 billion | FY27 to date |
| Crude oil price reference | ~USD 105 per barrel | April FY27 |
Policy Lever: Restricting Non-Essential Imports
ICICI’s note explicitly flagged the need for policy action to restrict non-essential imports to protect India’s external balance and contain the widening India current account deficit. Gold import duties have historically been adjusted when demand spikes sharply; the 82 per cent YoY surge in April gives the government a clear trigger if it chooses to act. Easing compliance to attract FPI inflows back is also cited as a lever available to policymakers.
India’s full Q1 FY27 current account data release will be the next key marker for whether April’s deterioration in India’s current account deficit is a one-month event or the start of a sustained trend.
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FAQ
Q: What is India’s current account deficit forecast for FY27?
ICICI Bank Global Markets projects India’s current account deficit at 1.5–2 per cent of GDP in FY27, up from approximately 1.0–1.1 per cent in FY26, assuming oil averages around USD 100 per barrel and non-essential imports are contained.
Q: Why did India’s trade deficit widen so sharply in April FY27?
Gold imports surged 82 per cent YoY to USD 5.6 billion and oil imports jumped 53 per cent month-on-month to USD 18.6 billion, driven by crude prices near USD 105 per barrel, pushing the goods trade deficit from USD 20.7 billion in March to USD 28.4 billion in April.
Q: How much have FPIs sold in India in FY27 so far, and what does it mean for the rupee?
FPI outflows stand at USD 10 billion in FY27 to date per ICICI Securities. Combined with a widening India current account deficit, sustained outflows at this scale historically pressure the rupee and require either a return of capital inflows or active RBI intervention to prevent meaningful depreciation.
India’s Q1 FY27 current account data release is the next key trigger, and the clearest test of whether the India current account deficit is drifting toward the upper end of ICICI’s 1.5–2 percent forecast range.
