As Iranian drones and missiles strike targets in the Persian Gulf, prolonged economic disruption from the Iran war could threaten the hundreds of billions of dollars in remittances sent home by millions of South Asian workers in the Gulf Arab states. Migrant labor from India, Pakistan and Bangladesh has for decades fueled the region’s construction, hospitality, tourism and health-care sectors, while remittances supply essential household income and significant foreign-currency inflows for the sending countries.
Energy infrastructure damage and blockages of oil and gas transit through the Strait of Hormuz raise the prospect of sustained higher energy prices. Combined with a fall in remittances, that would create a double economic shock for developing South Asian economies that rely on Gulf earnings to help cover trade deficits.
Remittances are a major lifeline, especially for India. Government data show India received a record $135 billion in remittances in 2025. Nearly $40 billion of that came from Gulf Cooperation Council (GCC) countries last year, about 38% of India’s total inflows. India is also the largest source of Gulf foreign workers, with over 9 million Indians employed there.
Bangladesh and Pakistan each send roughly five million workers to GCC states. Last year those workers comprised the bulk of Bangladesh’s $30 billion and Pakistan’s $38 billion in remittance receipts.
The conflict has heightened risks to civilians across 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 deaths caused by falling debris. Joey Shea, HRW’s senior Saudi Arabia and UAE researcher, warned that migrants “are being threatened, killed, and injured by Iranian drones and missiles.” 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 exodus of South Asian workers. Many remain because “economic survival trumps perceived risks,” said Harsh Pant, head of strategic studies at the Observer Research Foundation in New Delhi. He added that most Indian workers view the situation as “temporary and manageable unless it escalates dramatically.” Nonetheless, prolonged conflict could cost jobs, particularly in migrant-heavy sectors such as air travel and tourism.
So far, remittance flows have held up, aside from some irregularities from panic transfers. Rajiv Biswas, CEO of Asia-Pacific Economics, said the conflict’s duration has been too short to severely affect migrant employment or remittance transfers and he judges a prolonged war to be low probability. Still, analysts warn that a longer conflict would make remittance declines more likely as key GCC sectors suffer sustained losses.
Estimates of potential impact vary by scenario. The ORF projects that a 10–20% fall in Gulf remittance inflows to India would translate into a $5–10 billion annual loss. Capital Economics estimates that a war lasting a few weeks could shave 1–2% off Gulf GDP and reduce remittances by about 5%. If fighting drags on for three months or longer and heavily damages energy infrastructure, Gulf GDP could fall 10–15% and remittances could drop around 30%, the firm warned.
If remittances slump for an extended period, South Asian economies would face intensified strain beyond immediate energy price shocks. How quickly remittance flows would recover would depend on how soon sectors such as international tourism and commercial aviation rebound, analysts say. For now, the immediate economic danger to India, Pakistan and Bangladesh comes chiefly from disrupted oil, LNG and fertilizer shipments through the Strait of Hormuz; but a long-lasting remission in remittances would deepen their economic pain.
Edited by: Srinivas Mazumdaru