As Iranian drone and missile strikes strike targets in the Persian Gulf, a prolonged conflict risks disrupting the hundreds of billions of dollars that millions of South Asian migrant workers send home from the Gulf Arab states. For decades migrants from India, Pakistan and Bangladesh have powered the region’s construction, hospitality, tourism and health-care sectors, while their remittances provide vital household incomes and significant foreign-currency inflows for the sending countries.
Damage to energy infrastructure and interruptions to oil and gas flows through the Strait of Hormuz raise the prospect of sustained higher energy prices. For developing South Asian economies that depend on Gulf earnings to help close trade gaps, a simultaneous fall in remittances would create a damaging double shock.
Remittances are especially critical for India. Government figures show India received a record $135 billion in remittances in 2025, nearly $40 billion of which came from Gulf Cooperation Council countries last year — about 38% of India’s total inflows. India is also the largest supplier of workers in the Gulf, with more than 9 million Indians employed there. Bangladesh and Pakistan each send roughly five million workers to GCC states; last year those workers accounted for most of Bangladesh’s $30 billion and Pakistan’s $38 billion in remittance receipts.
The conflict has also increased risks to civilians in the Gulf, including migrant workers. Human Rights Watch reported on March 17 that at least 11 civilians have been killed and more than 260 injured across the region, with some fatalities caused by falling debris. Joey Shea, HRW’s senior Saudi Arabia and UAE researcher, warned migrants “are being threatened, killed, and injured by Iranian drones and missiles.” Reports say at least three Pakistani workers were killed in the UAE, including one struck by falling debris from a drone strike.
Despite the danger, there has been no mass departure of South Asian workers. Many remain because, as Harsh Pant of the Observer Research Foundation in New Delhi puts it, “economic survival trumps perceived risks.” He added that most Indian workers see the situation as “temporary and manageable unless it escalates dramatically.” Still, a protracted conflict could cost jobs in migrant-heavy sectors such as air travel and tourism.
So far remittance flows have largely held up, apart from some one-off panic transfers. Rajiv Biswas, chief executive of Asia-Pacific Economics, says the conflict’s short duration to date has not severely affected migrant employment or transfers and judges a prolonged war unlikely. But analysts caution that a longer confrontation would make declines in remittances more probable as key Gulf industries suffer sustained losses.
Estimates of the potential economic hit vary by scenario. The ORF projects that a 10–20% drop in Gulf remittances to India would equal roughly $5–10 billion a year. Capital Economics says a war lasting a few weeks could trim Gulf GDP by 1–2% and cut remittances by about 5%. If fighting stretches to three months or more and heavily damages energy infrastructure, the firm warns Gulf GDP could fall 10–15% and remittances might decline by around 30%.
If remittances slump for an extended period, South Asian economies would face intensified strain beyond immediate energy-price shocks. The pace of recovery in flows would depend on how quickly international tourism, commercial aviation and other Gulf sectors rebound. For now, the most immediate economic danger to India, Pakistan and Bangladesh stems from disrupted oil, LNG and fertilizer shipments through the Strait of Hormuz; a sustained fall in remittances, however, would deepen and prolong their economic pain.