New Delhi, Aug 18: India’s external sector outlook has improved significantly, with SBI Research now projecting a balance of payments (BoP) surplus of around $50 billion in 2026-27 and the current account deficit (CAD) at about 1 per cent of GDP.
The improved outlook comes after a strong response to measures introduced by the Reserve Bank of India (RBI) to attract foreign-currency funds, particularly through FCNR(B) deposits and other overseas borrowing channels.
According to SBI Research, the FCNR(B) mobilisation programme has attracted around $57 billion, while total inflows through FCNR(B) deposits, foreign-currency borrowings and external commercial borrowings could reach $80–85 billion.
These inflows have strengthened India’s foreign-exchange position. The country’s reserves stood at around $707 billion as of August 7, providing an important buffer against global financial volatility and external shocks.
The stronger reserve position is particularly valuable as rising crude oil prices and geopolitical tensions threaten to increase India’s import bill. Greater availability of foreign currency could help ease pressure on the rupee and support overall external stability.
The RBI has also decided to close its special FCNR(B) swap facility on August 31, a month earlier than initially scheduled, following strong participation.
The latest forecast represents a notable shift from earlier expectations of a sizeable BoP deficit. A surplus of around $50 billion would give India greater flexibility to manage external financing needs and sudden changes in global capital flows.
For businesses and investors, a stronger external position could improve confidence in India’s financial stability, while higher reserves would provide policymakers with greater room to respond to currency and external-market pressures.
The outlook, however, remains sensitive to global oil prices, interest rates, foreign investment flows, exports and remittances. Sustaining foreign-currency inflows will be important for maintaining the improved position through FY27.
Overall, the latest SBI Research assessment indicates that RBI measures have significantly strengthened India’s external-sector cushion, giving the economy greater resilience as it faces continuing global economic and geopolitical uncertainty.