Remittances from West Asia see 20-30% jump in March due to conflict

In the long run, this may have an impact because if the situation persists, job cuts, layoffs and redundancies could increase in West Asia.

Remittances from West Asia in March rose sharply amid the conflict in the region, with industry insiders estimating inflows to be 20-30 per cent higher than what is usual in a month.

With anxieties setting in, members of the Indian diaspora are remitting more, they said, adding that the depreciation of the rupee against the dollar has also contributed to the rise.

The rupee has depreciated 1.32 per cent since the conflict began, breaching 92 a dollar. Before this, it was trading near 91.

However, according to industry insiders, this is a short-term phenomenon because if the conflict prolongs, job losses in these countries could adversely affect remittances.

India is a leading recipient of inward remittances.

Where remittances come from

A big part comes from the United States (27.7 per cent of gross inflows), followed by the United Arab Emirates (19.2 per cent), the United Kingdom (10.8 per cent), Saudi Arabia (6.7 per cent), and Singapore (6.6 per cent), according to a report by IDFC First Bank.

“In March, there has been a significant uptick in remittances from West Asia,” a senior banker at a private bank said, adding that growth was 25-30 per cent.

“We are seeing growth in the last two weeks, but more particularly last week,” he said.

“In the long run, this may have an impact because if the situation persists, job cuts, layoffs and redundancies could increase in West Asia.

Sectors that are likely to be affected most

"Sectors such as hospitality may be significantly affected, and companies may start taking steps to reduce the number of employees.

"Similarly, construction, which has been a major driver in places like Dubai, could slow.

"These developments could have a cascading impact on other sectors,” he said, adding that in the short run, however, remittances had increased.

“In March, ESAF saw remittances to India increase by nearly 15–20% compared to the average so far this year, driven by the West Asian crisis as well as changes in exchange rates," said Paul Thomas, managing director and chief executive officer, ESAF Small Finance Bank.

What RBI data shows

The data from the Reserve Bank of India (RBI) shows that so far in 2025-26 (FY26), Indians living abroad have sent over $107 billion.

In FY25, they remitted more than $132 billion — a record high.

In FY24, it was a little over $117 billion.

“Remittances are estimated to rise to 3.5 per cent of GDP in FY26 versus 3.3 per cent in FY25, supported by rising share of skilled labour,” the report said.

Industry insiders also said banks that typically received a large share of remittances from West Asia were witnessing a similar trend.

This is particularly true for Federal Bank, which has over a 20 per cent share of the remittance market and derives around 85 per cent of its remittance inflows from the region.