Energy, airlines and now over $50 billion in remittances to India at risk as Middle East conflict deepens
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big story
It seems like India will not be able to escape this situation Consequences of increasing conflicts in the Middle East. A significant portion of the country’s energy imports are at risk of disruption, and the aviation sector faces higher costs due to airspace restrictions.
But the country has another multibillion-dollar concern to contend with: remittances.
India is the largest buyer remittances globally they account for approximately 3.5% of GDP; This is higher than the 2% share of the economy of exports to the United States. More than 9 million Indians to reside Remittances from the Middle East and the money they send back to their countries play an important role in supporting India’s finances and help reduce the current account deficit.
NEW DELHI, INDIA – MARCH 3: Indian passengers with relaxed expressions in Terminal 3 after their private flight from Riyadh return to India at Indira Gandhi International Airport in New Delhi, India on March 3, 2026.
Hindustan Times | Hindustan Times | Getty Images
According to the Citi report, the Indian diaspora in the Gulf countries contributes about 38% to India’s total remittance inflow. Considering the 135.4 billion dollar inflow in the 2025 fiscal year, the share of the Gulf countries is around 51.4 billion dollars.
To put it in perspective: India’s total trade excess With the USA, it was 58.2 billion dollars in 2025.
According to experts, Indian workers in Gulf countries mostly work in oil services, construction, hospitality and retail sectors; these sectors are particularly vulnerable to disruptions caused by Iranian attacks.
“A sharp decline [in remittance inflows] “It could worsen India’s external position and put some pressure on the rupee, especially when combined with rising oil prices due to the conflict,” said Alexandra Hermann, chief economist at Oxford Economics.
Foreign currencies of India in recent years exceeded there are foreign direct investment flows; those from the UAE alone contribute almost a fifth of flows, second only to the US (27.7%).
collateral damage
The good news, experts tell me, is that only a protracted conflict in the Middle East could disrupt India’s foreign exchange flows enough to impact the economy. The bad news is that no one is sure whether this conflict will be short-lived.
Hermann told me that a “moderate and temporary disruption” was manageable, but there could be a “greater risk” if the conflict led to a slowdown in construction and services activity in the Gulf that would affect Indian migrant workers.
The US-Iran war is in its sixth day and spreading to a wider region; US embassies in Riyadh and Kuwait are also attacked. US Secretary of State Marco Rubio promised that the scope and intensity of the US and Israeli attack on Iran will increase.
If the conflict continues for more than six months, it will have a material impact on India’s economy, Deepa Kumar, S&P’s head of Asia-Pacific country risk and co-head of India research, told me.
If the conflict is brought under control, “there may be initial shocks” to remittances from the Middle East, but this will be limited to spot labor contracts, Kumar said. Over the next few days, his team will begin assessing how a prolonged conflict might affect the economy.
As both sides intensified their attacks, hostilities were more likely to last longer. US President Donald Trump said on Monday that the military operation in Iran could last “much longer” than the anticipated four to five weeks.
Citi said in a note on Monday that remittances would be “adversely impacted” if the conflict drags on, as income opportunities for the Indian diaspora would be affected. But in the short term, “there could be an adverse positive effect if ‘risk aversion’ leads to greater repatriation,” the note said.
Will the country suffer collateral damage on multiple fronts from an unrelated war, or will the conflict end before the country suffers serious repercussions? We will only know this for sure in the coming months; watch this space.
you need to know
New Delhi oil supply concerns. India imports about 85% of its crude oil, and as global oil prices rise due to conflicts in the Middle East, the country’s already significant energy import bill is also expected to rise. Indian airlines are also seeing cost increases due to restricted use of airspace in Gulf countries.
India, Canada vow to deepen relations. During Prime Minister Mark Carney’s visit to New Delhi earlier this week, the two countries put aside differences, pledged to closer ties and vowed to deepen trade.
The Indian economy grew faster. The economy grew faster than expected, at 7.8% in the quarter ended December. The latest crackdown comes after the government overhauled its framework for calculating economic output to improve accuracy.
approaching
4-7 March: Finnish President Alexander Stubb visited India.
March 9: IPO of Rajputana Stainless opened
