India's September Balance of Payments Swings to Surplus on Capital Inflow Measures

what happened

Data from the Reserve Bank of India, released on Friday, showed the country's balance of payments in September in surplus by $8.8 billion, compared with a $5.6 billion deficit a year earlier, as reported by Reuters.

In June, authorities introduced a set of measures to attract capital, including a concessional foreign-currency deposit scheme for overseas Indians. These steps cushioned the impact of an unfavorable external backdrop marked by weak portfolio flows and elevated oil prices linked to the Iran war. The current account deficit widened to $7.4 billion in September from $5.2 billion a year earlier, while the capital account, which includes portfolio investment, recorded $16.2 billion of inflows versus $400 million of outflows in the same month of 2025.

Between June 8 and September 18, the central bank's capital inflow measures attracted more than $143 billion, of which $133 billion came through foreign-currency deposits. Conditions improved in November as oil prices retreated and shifting sentiment around AI-related investments helped lift portfolio flows into India.

why it matters

Through 2026 the rupee has been under pressure over balance-of-payments worries, as the Iran war pushed crude prices sharply higher and triggered persistent capital outflows. Renewed inflows and lower oil prices reduce the strain on the currency, signaling stabilization in India's external position. Further direction will depend largely on crude prices and on how portfolio flows develop.

market impact

Rupee: capital inflows and cheaper oil support India's external position

• ▲Indian rupee pressure up — capital inflows and rising portfolio flows strengthen the external balance

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