Is India's Trade Momentum Truly Robust as Forecasted by SBI Research?
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Synopsis
India's trade landscape remains strong amidst global uncertainties. A recent SBI Research report reveals projections for the current account deficit and highlights government measures to support exporters. Will these strategies bolster India's position in international markets?
Key Takeaways
- India's trade momentum remains resilient despite global challenges.
- Current account deficit projected to peak at 2.8% of GDP in Q3 FY26.
- Government measures include substantial financial support for exporters.
- Merchandise exports showed a 2.9% increase to $220 billion in FY26.
- Diversification of export destinations is evident.
New Delhi, Nov 22 (NationPress) India’s trade momentum continues to be resilient amid global fluctuations, with the current account projected to dip into a slight deficit before rebounding, according to a report released on Saturday.
The analysis from SBI Research anticipates that the current account deficit (CAD) will reach approximately 1.8 percent and 2.8 percent of GDP in Q2 and Q3 FY26, respectively, subsequently shifting into positive territory by Q4 FY26.
It estimates a fiscal-year deficit of around 1-1.3 percent and a marginal overall balance-of-payments deficit of up to $10 billion for FY26.
"While the balance of payments (BOP) is expected to turn negative in FY26, concerns regarding its impact on rupee fluctuations appear somewhat exaggerated at this moment," the report stated.
India's total merchandise exports from April to September FY26 increased by 2.9 percent to $220 billion, with shipments to the US rising 13 percent to $45 billion, despite front-loading effects and a decrease in the US share of exports since July 2025.
SBI Research noted that sectors such as marine products and RMG cotton experienced positive growth during the same April-September timeframe.
The proportion of India’s merchandise exports to other nations has significantly increased, showcasing a diversification of the export basket, with key destinations including the UAE, China, Vietnam, Japan, Hong Kong, as well as Bangladesh, Sri Lanka, and Nigeria across various product categories, the report highlighted.
SBI Research emphasized government initiatives to aid exporters, including the approval of Rs 45,060 crore, which encompasses Rs 20,000 crore in credit guarantees on bank loans.
This initiative is designed to bolster the global competitiveness of Indian exporters and facilitate diversification into new and emerging markets.
The report observed that the rupee's decline past 89.49 merely reflects global market turbulence and the strengthening dollar index, rather than indicating any structural implications for the currency's strength.
Point of View
It is vital to recognize the resilience of India's trade sector in the face of global challenges. The government's proactive measures to support exporters are commendable and demonstrate a commitment to fostering a diverse and competitive market. Our focus should remain on sustainable growth and adaptability in international trade.
NationPress
22/11/2025
Frequently Asked Questions
What is the current account deficit projected for FY26?
The current account deficit is expected to be approximately 1.8% and 2.8% of GDP in Q2 and Q3 FY26, respectively.
How much did India's merchandise exports increase in FY26?
India's total merchandise exports increased by 2.9% to $220 billion from April to September FY26.
What measures is the government taking to support exporters?
The government has approved Rs 45,060 crore, including Rs 20,000 crore in credit guarantees on bank loans, to enhance the competitiveness of Indian exporters.
Which sectors saw positive growth in exports?
Marine products and RMG cotton experienced positive growth during the April-September period.
What impact did the report suggest regarding the rupee's decline?
The report indicated that the rupee's decline reflects global market conditions and does not signify structural weaknesses in currency strength.
