<div id="readability-page-1"><div>MUMBAI, March 2 (Reuters) - India's current account deficit widened in the October-to-December quarter on the back of a higher merchandise trade deficit, the Reserve Bank ‌of India said on Monday.The current account deficit stood at $13.2 billion, or 1.3% ‌of GDP, in the third quarter of fiscal year 2025-26, compared with $11.3 billion, or 1.1% of GDP, a ​year earlier.In the preceding quarter, the deficit was $12.3 billion, or 1.3% of GDP.The October-December quarter saw the Indian economy face the brunt of U.S. trade tariffs of up to 50%, dampening export growth. Meanwhile, rising prices and shipments of gold pushed up imports.Although India saw ‌U.S. tariffs reduced after a ⁠trade agreement with Washington and a ruling by the country's Supreme Court, fresh risks have emerged as an escalating conflict in the Middle ⁠East has driven oil prices higher.&#34;The impact of the current conflict on the current account will only be felt if higher oil prices are sustained,&#34; said Gaura Sen Gupta, chief economist ​at IDFC ​First Bank in Mumbai.Since the starting point of ​the current account deficit is low, ‌only a 12-month sustained period of crude oil at $80 per barrel will push the deficit to 2% of GDP, she said.India's merchandise trade deficit widened to $93.6 billion from $79.3 billion a year earlier, the RBI said.Net services receipts rose to $57.5 billion in the quarter from $51.2 billion a year earlier, the data showed.Private transfer receipts, which are mainly remittances by ‌Indians employed overseas, increased to $36.9 billion in the quarter ​from $31.5 billion a year earlier.India's balance of payments ​recorded a deficit of $24.4 billion, compared ​with a deficit of $37.7 billion a year earlier as capital outflows eased ‌marginally.Pressure on the Indian rupee continues ​to stem from the ​capital account, Sen Gupta said. However, in the next quarter, the balance of payments may be marginally positive because of $20 billion in dollar/rupee buy-sell swaps conducted by ​the central bank, she said.These ‌swaps, aimed at replenishing rupee liquidity taken out due to dollar sales ​to support the rupee, add to India's forex reserves until they are reversed.(Reporting ​by Ira Dugal; Editing by Sonia Cheema)</div></div>

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India's current account deficit widened to $13.2 billion (1.3% of GDP) in Q3 FY 2025-26, up from $11.3 billion a year earlier, driven by a larger merchandise trade deficit of $93.6 billion. Rising gold imports and U.S. trade tariffs impacted exports. Despite reduced tariffs from a trade agreement, escalating Middle East conflicts may sustain higher oil prices, potentially pushing the deficit to 2% of GDP if crude remains at $80 per barrel. Net services receipts rose to $57.5 billion, while private remittances increased to $36.9 billion. The balance of payments recorded a deficit of $24.4 billion, but may improve next quarter due to central bank dollar/rupee swaps.

- India's current account deficit expanded to $13.2 billion in Q3 of fiscal year 2025-26, driven by a larger trade deficit, representing 1.3% of GDP compared to $11.3 billion and 1.1% the previous year.  
- The trade deficit grew from $79.3 billion to $93.6 billion annually, while net services income increased to $57.5 billion.  
- Rising oil prices due to Middle East conflicts present new risks, though a recent trade agreement with the U.S. has offered some relief on tariffs.

India's current account deficit widened in December quarter on large trade gap