India has once again topped the charts as the world’s largest recipient of remittances from its diaspora community.
In the last financial year, Indians living abroad sent a whopping $135.46 billion back home, marking a significant 14% increase from the previous year. This massive influx of funds has been a steady trend over the past decade, with remittances more than doubling since 2016-17.
Today, these remittances account for a substantial 10% of India’s total foreign exchange earnings.
The Indian diaspora’s financial contributions play a vital role in supporting the country’s economy, and their impact will likely continue to be felt in the years to come.
The Chief Economist at IDFC First Bank, Gaura Sengupta, said, “The strong growth in remittances has persisted despite weakness in crude oil prices.”
Adding more, she stated, “This is a result of the rising share of the skilled labour force migrating to developed markets such as the US, UK and Singapore. As per RBI data, these three countries account for a 45% share in total remittances.”
Further, she noted, “Meanwhile, the share of GCC countries has been reducing.”
Oil prices from the Gulf Cooperation Council (GCC) often influence the remittances.
Besides remittances, India’s current account also received a significant boost from its thriving services sector.
Software services & business services exports both crossed the $100 billion mark last year, making them Key contributors to India’s foreign exchange earnings.
Together, remittances, software services, and business services accounted for over 40% of India’s total current account inflows.
A report by RBI staff on a survey of remittances noted, “India’s remittance receipts have generally remained higher than India’s gross inward foreign direct investment (FDI) flows, thus establishing their importance as a stable source of external financing.”
Moreover, they are a major source of funding for India’s trade deficit.
In the last financial year, remittances from overseas Indians made up a staggering 47% of India’s massive $287 billion trade deficit. This significant contribution highlights the crucial role that remittances play in bridging the gap between India’s imports and exports.
India holds the top spot as the world’s largest recipient of remittances, with a significant lead over its closest competitors.
According to World Bank data, Mexico came in second in 2024, receiving $68 billion in remittances, while China ranked third with $48 billion, less than a third of India’s total.
Remittances represent a vital flow of income across borders, driven by people moving to foreign countries for work.
According to the International Monetary Fund, remittances are recorded in two parts of a country’s balance of payments: compensation for workers and personal transfers.
In India’s case, personal transfers make up the bulk of incoming remittances. These transfers mainly consist of money sent home by Indian workers abroad to support their families, as well as withdrawals from non-resident deposit accounts.
A research paper published in the Reserve Bank of India’s March 2025 bulletin highlighted this.
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