New Delhi, June 5 -- India's current account deficit (CAD) is set to widen in the fourth quarter of FY25, experts warned, citing factors such looming Trump tariffs which would not only hit Indian exports but also drive Chinese shipments to India, and falling short-term foreign capital outflows. Lower remittances from overseas Indians -- the fallout from a shrinking global economy and US President Donald Trump's proposed tax on such transfers -- could also help widen the deficit, they said ahead of the June-end publication of Q4 data. The widening could continue into subsequent quarters unless there's a change in macroeconomic fundamentals, they warned. Increased tariffs, announced by US President Donald Trump, could spur China to divert goods to other countries, experts fear. The CAD - when the value of a country's imports exceeds what it earns from exports - rose marginally to $11.5 billion, or 1.1% of GDP in the October-December quarter of FY25 from $10.4 billion, or 1.1% of GDP, a year earlier, despite strong growth in service exports. A widening current account deficit puts pressure on the rupee and inflates costs for businesses. On a sequential basis, the CAD moderated from $16.7 billion (1.8% of GDP) in Q2FY25, according to data released by the Reserve Bank of India (RBI) in March. India's goods trade deficit rose to a five-month high of $26.42 billion in April on the back of higher imports. Exports rose too, but more moderately, according to the provisional data released by the commerce ministry last month. The latest GST data revealed a sharp surge in imports in May. While net domestic GST revenue (after refunds) grew 9.7%, matching April's pace, net customs revenue from IGST and cess on imports soared 73% in May, a stark contrast to the modest 5.2% growth recorded in the previous month. "There is a risk of the current account and trade deficits widening this year, along with short-term foreign capital outflows as US yields rise," said Bhanumurthy N.R., director at the Madras School of Economics. "A global economic slowdown and the proposed US tax on remittances could also weigh on remittance inflows, adding further pressure to the external account," he said. Global uncertainties are prompting investors to favour safer, higher-yielding US bonds over emerging-market debt. On Monday the yield on the benchmark US 10-year notes rose 3.2 basis points to 4.45%, while the 30-year bond yield increased 4.6 basis points to 4.98%. In contrast, Indian 10-year government bonds currently yield 6.22%. Bond prices and yields move in opposite direction. Fiscal year 2025 began with strong foreign investor inflows of around Rs.28,000 crore but this reversed sharply in the second half, with over Rs.2 trillion sold off, resulting in net outflows of about Rs.1.53 trillion ($17.8 billion) for the year. The Trump administration has proposed a 5% excise tax on outward remittances, which would affect millions of individuals, including US green card holders andIndians on H1Bvisas....