— India's current account deficit is expected to rise to 2.2 per cent of gross domestic product in FY27 from 0.6 per cent in FY26, as elevated energy prices will weigh on the external balance
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NEW DELHI — India's current account deficit is expected to rise to 2.2 per cent of gross domestic product in FY27 from 0.6 per cent in FY26, as elevated energy prices will weigh on the external balance, a report said on Thursday.
The report from Crisil Ratings forecasted Brent crude to average $90-95 per barrel this fiscal, around 32 per cent higher than in fiscal 2026.
Oil remains the biggest source of the goods trade deficit. Despite the expected resolution of geopolitical uncertainties in West Asia and the announced reopening of the Strait of Hormuz, energy prices are expected to remain elevated on-year as it will take several months for supplies to normalise fully.
India's merchandise exports saw a broad-based 18 per cent acceleration on-year to $45.2 billion in May, compared with 13.8 per cent acceleration to $43.6 billion in April, the report said.
Merchandise imports surged 20.6 per cent on-year to $73.4 billion after 10.0 per cent growth to $71.9 billion in April.
India’s merchandise trade deficit widened to $28.2 billion in May 2026 from $22.6 billion a year ago, though it narrowed a bit from $28.4 billion in April.
Petroleum exports were up 54.9 per cent YoY and core exports (goods excluding oil and gems and jewellery) rose 12.3 per cent to $34.2 billion.
Gems and jewellery rebounded to 6.7 per cent growth, while a jump in petroleum exports was due to a statistical low-base effect.
Brent crude averaged $107.1 per barrel in May, down 8.7 per cent from April. Sequentially, oil exports fell to $8.4 billion in May from $9.6 billion in April, led by lower crude oil prices on-month, after the extraordinary surge in the past two months on account of the conflict in West Asia.
Outside West Asia, India’s exports to the US continued to improve ($8.8 billion vs $8.5 billion in April), reflecting the positive impact of lower tariffs. However, given the continuing uncertainty around tariff levels, the trajectory of these exports remains monitorable.