West Asia Conflict Seen as Threat to India's Remittance Flows

India's Remittance Flow May Be Impacted by West Asia Conflict

The ongoing West Asia conflict may have significant implications for India's remittance flow, as Crisil Ratings revealed on Friday that one-third of the inflows from the diaspora come from Gulf Cooperation Council (GCC) countries.

The current account deficit (CAD) can be adversely impacted due to a cut in the diaspora's incomes, according to a note from Crisil Ratings. This is particularly concerning given the existing pressure on India's trade deficit. As the world's largest beneficiary of remittances from the diaspora, India received over USD 135 billion of flows in the fiscal year 2025.

The West Asia conflict is also expected to disrupt global trade flows and slow down global growth, which will likely have a drag effect on India's export growth. However, lower US tariffs will provide some support to the sector. Under the base case scenario, Crisil expects a higher import bill due to an 8-9 per cent year-on-year rise in crude price.

India's exports to West Asia have been impacted by logistical challenges and supply-chain realignments due to the conflict. The report highlights that India exported goods worth USD 57 billion to GCC countries, which accounts for 13 per cent of India's total goods exports. Additionally, USD 9 billion worth of goods were exported to other West Asian countries, which constitutes 2 per cent of India's total goods exports.

The GCC countries, comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, are major markets for India's exports. The region also holds significant importance for specific products, such as Basmati rice (70 per cent of exports), boneless bovine meat (30 per cent), ceramic products (25 per cent), petroleum products (15 per cent), and gems and jewellery (20 per cent).

| Country/Region | India's Total Goods Exports | USD Value | | --- | --- | --- | | GCC Countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE) | 13% | USD 57 billion | | Other West Asian Countries (Iran, Iraq, Israel, Jordan, Lebanon, Syria, Yemen) | 2% | USD 9 billion |

The report notes that exports to West Asia are getting impacted by logistical challenges and supply-chain realignment, which may have mixed implications for India's trade sector.