Remittances from Gulf countries — a financial lifeline for millions of Indian households, particularly in Kerala — are showing early signs of strain as geopolitical tensions in West Asia trigger caution among migrant workers. While the impact remains limited for now, currency dealers say transfers from the region have declined modestly in recent weeks.
Forex intermediaries estimate that remittances from the Gulf have slipped around 4–5 percent since the escalation of tensions in the region. Banks, however, say inflows into India remain broadly stable and there is no evidence yet of a structural slowdown.
The Gulf Cooperation Council (GCC) countries account for a major share of India’s inward remittances. According to estimates cited by industry participants, the US remains the largest source of remittances to India with about 27.7 percent of inflows, followed by the UAE (19.2 percent), the UK (10.8 percent), Saudi Arabia (6.7 percent) and Singapore (6.6 percent).
Currency dealers say the decline is mainly visible in remittances from Gulf countries such as the UAE, Saudi Arabia, Qatar and Kuwait, where a large number of Indian migrant workers are employed.
Forex operators report that while the number of transactions has declined slightly, the average amount per transfer has increased. This suggests that migrant workers are sending money less frequently but in larger amounts, possibly due to uncertainty surrounding the regional conflict.
Workers in sectors such as construction, hospitality and services account for a large portion of remittances from the Gulf.
Seasonal factors are also playing a role. The Ramadan period usually sees many migrant workers travelling home to India with cash and gifts for their families. This year, however, higher travel costs and uncertainty in the region are encouraging some workers to send money through remittance channels instead.
For Kerala, the trend is particularly important. The state is one of the biggest beneficiaries of Gulf remittances in India. According to various migration studies, Kerala receives roughly 18–20 percent of India’s total inward remittances despite having only about 3 percent of the country’s population.
The Gulf remains the primary destination for Malayali migrant workers. Of the estimated 18–19 million Indians living in the GCC countries, around 3–3.5 million are believed to be from Kerala. The UAE and Saudi Arabia host the largest Malayali communities, followed by Qatar, Kuwait, Bahrain and Oman.
Remittances play a crucial role in Kerala’s economy, supporting household consumption, real estate investment, education spending and small businesses. Any prolonged disruption in the region could therefore have ripple effects on the state’s economy.
Banks say remittance flows typically remain resilient even during geopolitical tensions because migrant workers prioritise sending money home for family maintenance.
Industry participants also note that the recent depreciation of the rupee could support remittance inflows, as non-resident Indians tend to transfer more funds when exchange rates become favourable.
However, analysts caution that the situation remains fluid. If tensions in West Asia escalate further or begin affecting employment conditions in Gulf economies, the impact on remittances could become more visible in the coming months.
