India’s capital account surplus could rise to $105 billion (2.6% of GDP) in the 2027 fiscal year (FY27). A robust increase in foreign capital inflows—driven by rising FDI, portfolio investments, and external commercial borrowings (ECBs)—has been identified as the primary reason for this growth. This projection is outlined in a new report by Motilal Oswal Financial Services (MOFS).
According to the report, sustained strength in services exports and foreign remittances is bolstering India’s external sector. The country is recording an average monthly services trade surplus of $16–17 billion, which significantly offsets the merchandise trade deficit.
Key Projections
– Services Exports: Reached $103.4 billion in the first quarter of FY27, marking a 6.2% increase.
– Merchandise Trade Deficit: Likely to rise to $406 billion (9.9% of GDP) in FY27.
– Current Account Deficit: Projected to rise marginally to $60 billion (1.5% of GDP).
– Total BoP Surplus: Approximately $45 billion (1.1% of GDP).
The report states that recent initiatives by the Reserve Bank of India (RBI) and the government are expected to attract an additional $75–80 billion in foreign capital inflows. Furthermore, the inclusion of Indian government securities in global bond indices could generate passive inflows of $15–20 billion.
Positive Factors
Motilal Oswal also highlighted the significance of the India-UK Comprehensive Economic and Trade Agreement (CETA), which came into effect on July 15, 2026. This agreement is expected to provide a structural boost to India’s external sector. The report states, “A strong recovery in capital flows is expected, potentially pushing the capital account surplus to $105 billion by FY27.”
Analysts believe that rising foreign investment, the strength of the services sector, and the expansion of free trade agreements will further bolster India’s external economy. This scenario will also help alleviate pressure on the rupee and boost foreign exchange reserves.
