India's remittance inflows stay resilient despite West Asia conflict

India’s remittance inflows have remained resilient despite the West Asia conflict, with precautionary transfers keeping flows elevated even as economic activity in parts of the Gulf region faced disruptions. While bankers expect some moderation in growth as geopolitical tensions ease, remittances are likely to remain broadly stable this year, supported by the diversification of India’s remittance sources.

“Remittance inflows have remained remarkably resilient despite the ongoing conflict in West Asia. The strong momentum seen in April has continued through May, and the first half of June, with both year-on-year (Y-o-Y) and month-on-month (M-o-M) growth remaining healthy,” said a senior banker at a private sector bank.

“While we expect some moderation in the coming months because the current pace is unlikely to be sustained indefinitely, remittances in FY27 should still remain higher than last year. The conflict has not had the adverse impact on remittances that many had feared. In periods of uncertainty, overseas workers often increase transfers to their families back home, while favourable exchange rates can also encourage higher remittances,” the banker said, adding that looking ahead, if the situation stabilises, there could be some normalisation in flows.

At the same time, reconstruction and rebuilding activity in the region could create additional job opportunities, supporting remittances over the medium term, the banker said.

Latest Reserve Bank of India (RBI) data shows that net remittance inflows remained strong at $16 billion in April, compared with an average monthly inflow of $13.7 billion in the fourth quarter of 2025-26 (Q4FY26), suggesting that the West Asia crisis has so far had little impact on remittance flows despite disruptions to production activity in the Gulf Cooperation Council region.

“Inward remittances were particularly strong in Q4FY26, with a notable increase in flows from Gulf-based non-resident Indians (NRIs). The rise appears to have been driven not only by underlying growth in the NRI population and remittance base, but also by geopolitical uncertainty in West Asia. The inflows may moderate as the regional tensions ease. But, a sharp slowdown is not expected as the RBI’s recent scheme on FCNR(B) deposits may support inflows in the near term,” said a second banker.

India’s net inward remittances have seen a steady upward trend over the past five years. In FY26, inward remittances stood at $144.79 billion, up from $124.55 billion in FY25 and nearly $106.63 billion in FY24. The figure was $101.77 billion in FY23, $81.23 billion in FY22, and $74.44 billion in FY21.

The US remains the largest source of remittances to India, accounting for 27.7 per cent of gross inflows, followed by the UAE (19.2 per cent), the UK (10.8 per cent), Saudi Arabia (6.7 per cent), and Singapore (6.6 per cent). Since the Covid-19 pandemic, India’s dependence on remittances from the GCC countries has gradually declined, reflecting a rise in the share of skilled Indian workers migrating to advanced economies such as the US, the UK, and Singapore.

“While the escalation in West Asia did raise concerns about a potential impact on remittance flows, the data so far does not suggest any meaningful disruption. Going forward, some normalisation in remittance flows cannot be ruled out, especially if the recent surge was partly front-loaded. However, we do not expect a sharp decline in remittances for the year as a whole, and have broadly maintained our FY27 remittance projections at FY26 levels,” said Gaura Sen Gupta, chief economist, IDFC First Bank.

She said any moderation in one quarter could be offset by stronger inflows in subsequent quarters as economic activity in GCC countries stabilises, and reconstruction-related demand emerges.

“It is also important to note that India's remittance profile has become considerably more diversified over the years. While the GCC remains an important source, its share in total remittances has declined, with larger contributions now coming from the US and other advanced economies. This diversification provides a cushion against region-specific shocks,” she added.