Friday 17 / April / 2026
New Delhi: India's current account deficit (CAD) is likely to touch 2 per cent of GDP under higher oil price scenarios, according to a report by Crisil.
The report stated that in its base case scenario, assuming exports benefit from US tariff relaxations and crude oil prices average between USD 75-80 per barrel, the CAD is expected to widen to 1.5 per cent of GDP in fiscal 2027, compared to a projected 0.8 per cent in fiscal 2026.
However, in an alternate scenario where crude oil prices stay at USD 82-87 per barrel, which the report noted appears plausible given current global conditions, the CAD could increase to 2.0 per cent of GDP. It added that a healthy services trade surplus is expected to limit the extent of the widening deficit.
It stated, "If oil price were to rise to USD 82-87/bbl, which is our alternate case and looks plausible now, then the CAD could rise to 2.0 per cent of GDP".
The report highlighted that the ongoing West Asia conflict and its duration and scale remain critical factors to monitor, as they could significantly impact global trade and commodity prices.
Elevated uncertainties and subdued global growth, particularly in the case of supply shocks, may weigh on exports despite some expected support from reduced US tariffs.
On the trade front, India's goods exports contracted 7.4 per cent year-on-year to USD 38.9 billion in March, compared to an average growth of 0.3 per cent in the three months ended February.
The report mentioned that the decline was partly attributed to a high base effect due to export frontloading last year ahead of anticipated US tariff hikes, as well as the impact of the West Asia conflict.
The contraction in exports was led by a sharp 29.3 per cent drop in gems and jewellery exports. The report noted that the United Arab Emirates has recently emerged as India's top destination for gems and jewellery exports, surpassing the United States. Core exports also declined 7.5 per cent year-on-year, indicating broad-based pressure.
Despite these challenges, exports to the United States showed some improvement, rising to USD 8 billion in March from USD 6.6 billion in February. This was supported by progress in trade discussions, with US tariffs on Indian goods reduced from 50 per cent to 18 per cent and subsequently to 10 per cent. However, the report cautioned that uncertainties around the trade deal remain.
