Chennai: India’s Current Account Deficit is expected to increase to 2 per cent of GDP in FY27 from estimated 0.9 per cent in FY26, finds the IMF. India should prioritize reducing import restrictions, especially on intermediate goods, while continuing to improve the business environment to boost private investment and liberalize the FDI regime. External risks are related to commodity price pressures, supply chain disruptions, weakening external demand, and global financial conditions. Gross domestic investment declined by an estimated 0.5 percentage points to 33.9 per cent of GDP, reflecting US tariff hikes and trade policy uncertainty. The Indian rupee came under depreciation pressure, as India faced 50 per cent additional US tariffs from August 2025 to February 2026.