The current-account deficit is forecast to remain fairly steady as a share of GDP in the forecast period, at around 2%. Substantial capital inflows will ensure that the shortfall on the current account poses little risk to the economy, and India will continue to accumulate foreign-exchange reserves. Merchandise exports and imports will both expand rapidly in 2011-15: exports will grow at an average annual rate of 12.4%, while imports will rise by 13.2% a year. As a result, the trade deficit will widen to US$264.9bn in 2015, from an estimated US$135.3bn in 2010. Strong growth in merchandise exports and imports in the five-year period will reflect not only robust economic growth but also the further opening of the local economy to international trade and global production systems. The expansion of the country's manufacturing capacity will boost its export performance as well as leading to increased demand for raw materials, while booming domestic demand will sustain rapid growth in imports of consumer goods.

Services exports will continue to play a vital role in the country's external trade as information technology (IT) and business-process outsourcing continue to lure Western companies to India. Having built up supplier relationships, India's IT companies are expected to continue to grow rapidly, and the most sophisticated of them will continue to move up the value-added chain. Services exports are forecast to grow by 20% a year on average in 2011-15, enabling the services surplus to increase to almost US$159.1bn by 2015, when the value of services exports will be equivalent to around three-quarters of revenue from merchandise exports. The income deficit, which is small at present, will widen steadily to over US$40bn in 2015, reflecting an increase in the repatriated profits of foreign companies operating in India. The current transfers balance will stay positive, rising to US$108.7bn in 2015, driven by strong growth in remittances from Indian workers overseas.