New Delhi [India], May 31 (ANI): A robust outlook for India's services trade balance, particularly in software and business services, along with steady inward remittances from non-Gulf countries, is expected to support the country's current account balance in 2026-27, according to the Reserve Bank of India's (RBI) Annual Report 2025-26.

In its assessment of the outlook for the external sector, the RBI said that despite uncertainties surrounding global trade and geopolitical developments, India's strong services exports and remittance inflows are likely to act as a key buffer for the balance of payments.

'Robust outlook for India's services trade balance, in particular software and business services, and inward remittances from non-gulf countries is expected to support current account balance during 2026-27,' the RBI said in its Annual Report.

The central bank's optimism comes even as it flagged risks to merchandise exports from ongoing geopolitical conflicts and global policy uncertainty.

According to the report, implementation of trade agreements with key partners and a policy push to strengthen domestic manufacturing in strategic sectors are expected to improve export competitiveness and reduce dependence on imports.

The RBI noted that India's services exports have remained a major source of strength for the external sector. During April-December 2025, net services exports grew by 15.3 per cent year-on-year, driven primarily by software and business services, which accounted for 77.8 per cent of the country's total services exports.

The report also said that global spending on information technology is expected to remain strong, supporting demand for Indian software services exports.

'Going forward, robust global IT spending, as projected by Gartner, bodes well for India's software services exports,' it said.

The RBI further highlighted policy measures announced in the Union Budget 2026-27 that could attract greater foreign investment into the country.

'The Union Budget 2026-27 announcements pertaining to tax holiday and safe harbour for foreign companies for developing data centres in India, and infrastructural investments to the tune of US$ 250 billion committed till 2047 in the India AI Summit 2026 augur well for attracting FDI,' the report said.

The report added that liberalised foreign direct investment norms in the space sector, including allowing up to 100 per cent FDI in satellite manufacturing and components, are expected to attract global capital and technology.

It also said that the conclusion and implementation of ongoing bilateral and regional trade agreements could further boost India's trade and investment opportunities and support capital inflows during 2026-27.

India's external sector remained resilient during 2025-26 despite heightened global uncertainty, supported by a sustained services trade surplus and steady inward remittances, the RBI noted. (ANI)