But the situation was relatively manageable, thanks to net capital inflows of $57.9 billion and some drawdown of official foreign exchange reserves. As international commodity prices eased and India started buying discounted Russian crude, the CAD narrowed to $26.1 billion, even as net capital flows soared to $89.8 billion, in 2023-24. Capital flows fell to $18 billion in 2024-25 and have turned negative (minus $581 million) for the April-December 2025 period. Given the level of integration and flow of goods, labour and capital, any cataclysmic event in this region has huge consequences for India. The impact would be both on merchandise trade (especially from higher imported oil and gas prices) and invisibles (from lower remittance receipts), adding to the already weak capital flows.

Source: Indian Express March 07, 2026 13:34 UTC