Crisil Ratings, in a note on the West Asia conflict, has said that the ongoing tensions in West Asia likely to affect India’s remittance inflows, as nearly one-third of these funds come from the diaspora in Gulf Cooperation Council (GCC) countries. A decline in remittances, driven by reduced incomes among overseas Indians, could adversely impact the current account deficit (CAD). The agency noted ‘A hit to their incomes can have implications for India’s CAD at a time when the trade deficit is already under pressure.’

India is the world’s largest recipient of remittances from its diaspora, receiving over $135 billion in FY25. Export growth is likely to face some headwinds due to disruptions in global trade flows caused by the West Asia conflict, along with slower global economic growth, although lower US tariffs are expected to provide some support. Under the base-case scenario, Crisil also anticipates a higher import bill, driven by an 8-9% year-on-year increase in crude oil prices. Meanwhile, exports to West Asia have been affected by logistical challenges and supply-chain realignments stemming from the conflict, though the overall impact is expected to be mixed.

India exported goods worth $57 billion to GCC countries - accounting for 13% of its total goods exports -and an additional $9 billion (2%) to other West Asian nations. The GCC includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, while other West Asian countries comprise Iran, Iraq, Israel, Jordan, Lebanon, Syria, and Yemen. For certain products, the region holds significant importance, accounting for over 70% of India’s basmati rice exports, 30% of boneless bovine meat exports, 25% of ceramic products, 15% of petroleum products, and 20% of gems and jewellery exports. Exports to West Asia are currently being affected by logistical challenges and supply-chain realignments.