Mumbai, Dec. 5 -- RBI governor in its December policy stated that India's current account deficit moderated from 2.2 per cent of GDP in Q2:2024- 25 to 1.3 per cent in Q2:2025-26 on account of robust services exports and strong remittances. In October 2025, merchandise exports contracted year-on-year, whereas merchandise imports continued to increase for the second consecutive month, resulting in a widening of the trade deficit. Healthy services exports coupled with strong remittance receipts are expected to keep CAD modest during 2025-26.

On the external financing side, gross foreign direct investment (FDI) to India increased at a robust pace during the first half of the year. Net FDI also increased significantly due to a decline in repa...