India's CAD to double in Q2 FY26 amid rising imports: ICRA

Meanwhile, India’s CAD is likely to remain comfortable at 0.6 per cent of GDP in FY26, in line with FY25, albeit with risks owing to tariff-related developments, ICRA said in its August 2025 report.

The prediction from ICRA came after India’s merchandise exports registered a YoY growth of 7.3 per cent to $37.2 billion in July 2025, after the tepid 1.7 per cent rise in the first quarter (Q1) of fiscal 2026 (FY26). In contrast, merchandise imports witnessed a broad-based, and relatively steeper increase of 8.6 per cent to $64.6 billion in July 2025.

While India’s export growth to the US remained in double digits for the seventh consecutive month in July 2025, taking the share of the country to ~22 per cent from 19 per cent a year ago, the growth is likely to moderate in the near term, given the likely stockpiling across some categories as well as the uncertainty around the tariffs, added the report.

India’s merchandise trade, as per the Ministry of Commerce and Industry, includes exports such as readymade garments of all textiles, engineering goods, petroleum products, electronic goods, drugs and pharmaceuticals, gems and jewellery, and a wide range of other commodities.

Fibre2Fashion News Desk (SG)