What happened?
Remittances to India are undergoing a significant shift, with advanced Western economies now surpassing Gulf nations as the primary source of inward remittances. The Reserve Bank of India’s (RBI) March 2025 Bulletin highlighted a noteworthy transformation in India’s remittance inflows. The bulletin’s revealed that for the fiscal year 2023-24, advanced economies have surpassed the Gulf Cooperation Council (GCC) countries as the primary sources of India’s inward remittances. This shift align with India’s on-going advocacy for legal migration of its skilled professionals across different parts of the world.
The shift also illustrates the changing pattern of India’s migration which is now witnessing unpresented growth of India’s skilled professionals across the West, compared to traditional labour-intensive markets of the Gulf region. Notably, the US has emerged as the largest contributor, with its share rising to 27.7% in 2023-24 from 23.4% in 2020-21. The UK’s share also grew from 6.8% to 10.8% in the same period. Meanwhile, the UAE remains the second-largest source at 19.2%.
Overall, as per the Bulletin, over 50% of India’s remittances in the fiscal year 2023-24 came from countries such as the United States, United Kingdom, Canada, Singapore, and Australia. Meanwhile, the share from Gulf Cooperation Council (GCC) nations—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates witnessed a turnaround of 37.9 %. This shift comes as India’s inward remittances more than doubled from USD 55.6 billion in 2010-11 to USD 118.7 billion in 2023-24.
Why it matters?
Inward foreign remittances have always been of critical importance for India’s economy. It constitutes more than 3% of GDP and being one of most important source of foreign exchange reserve. Remittances finance nearly half of India’s merchandise trade deficit and have served as a crucial buffer against external economic shock.
This fundamental shift in the origin of remittances carries significant implications for household incomes, consumption patterns, investment activities, and the broader regional economic dynamics within India. The fact that advanced economies now constitute the primary source of these financial inflows suggests a potential alteration in the socioeconomic profile of households receiving remittances, with a possible inclination towards those connected to higher-skilled migrants who typically command better salaries. However, the remittances from high-income economies also expose India to certain economic risks in the backdrop of unpredictable stricter immigration policies (as exemplified under current US administration), economic slowdown and currency fluctuations. Also, the decline of remittance from the Gulf also point to the vulnerabilities that Indian workers have to face such as localisation of migration policies, autonomation of work, stagnation of wage growth and shift towards high skilled migration etc and its impact on economies of Indian states like Kerala, Tamil Nadu and Uttar Pradesh (which have large work force in the Gulf).
Thus, understanding the long-term viability of this emerging trend and its wider ramifications for India’s economic trajectory and labour migration strategies will be of paramount importance for policymakers and stakeholders alike.
How did this shift occur?
The changing dynamics of remittance is led by several key factors being changing composition of India’s migrant workforce being the most critical aspect. Indian professionals now work across important segments such as IT, healthcare, finance, engineering etc across the developed economies of the world. Amongst all, in the USA alone, there are an estimated more than 4.8 million Indian-origin people, and the number of Indians who became permanent residents in Canada increased from 32,828 in 2013 to 118,095 in 2022, marking a 260% increase over this period. Moreover, the number of Indian students abroad rose to 1.3 million in 2024. It is noteworthy that most of these Indian students will be entering the labour markets of their host countries after finishing their studies, hence contributing towards enhanced remittance back home in India. Meanwhile, the Gulf region is undergoing a labor market transformation wherein these Gulf nations are now prioritizing their own local population over foreign workers for employment in labour-intensive sectors.
These economic diversification efforts in the Gulf have also led to automation in construction and service industries, reducing job opportunities for Indian workers. Consequently, Gulf remittance inflows have stagnated while remittance from the advanced economies steadily increased. For example, the median annual salary for high-skilled Indian professionals in the U.S. is estimated at $120,000, compared to an average of $10,000 for Indian labourers across the Gulf. This wage disparity results in a higher per capita remittance contribution from developed nations. Additionally, the expansion of fintech solutions and digital banking has streamlined remittance transfers, with 73.5% of remittances in 2023-24 processed through digital channels. In addition, the large-value transactions (over ₹5 lakh) accounted for 29% of total remittances. Also, the introduction of blockchain-based platforms and real-time payment systems has further accelerated this transition, reduced transaction costs and improving efficiency.
What Next?
The shift in remittance flow patterns presents both opportunities and challenges for India. Negotiating mobility agreements with key countries to facilitate smooth skilled migration has become more pertinent, especially as India’s working-age population is projected to grow until 2048, positioning the country as a major labour supplier to the world. Hence, India should expand the signed labor agreements with Gulf nations for the protection of low-wage workers and enhance the strength of social security and legal aid mechanisms. At the provincial level, Maharashtra, Karnataka, and Telangana—states with higher numbers of skilled migrants in the US and Canada—are expected to witness growing remittance inflows.
Overall, India’s remittance story is evolving, reflecting broader trends in global migration and economic shifts. This development augurs well in the rise in high-income remittances; however, sustained inflows of such funds depend on proactive policy interventions. While the diversification of migration pathways, harnessing digital finance, and proper remittance fund use are expected to be India’s stepping stones, the government should turn this transformation into a long-term economic gain.
