India's current account deficit is likely to widen in FY27, with the goods deficit expected to rise to USD 390 billion amid strong domestic demand and elevated imports. However, the sharp turnaround in capital flows should remain supportive of the rupee in H2 (second half of the year), according to ICICI Bank.

The private lender noted in its report that India's goods deficit widened sharply to USD 85.7 billion in Q1 FY27 from USD 68.9 billion a year ago. This increase was mainly driven by elevated oil prices and a surge in non-oil-non-gold imports.