Foreign remittances are the most direct economic contribution of all Indian diaspora irrespective of their skill status: unskilled, semiskilled and skilled segments. Livelihood of the dependent families back home largely depends on the foreign remittances coming from the unskilled and semiskilled categories. It is not only for the families but also keeping the economic growth of India through remittances. 

The present war situation in the entire GCC restricts the flow of such remittances.   

India stands No.1 in receiving remittances globally. It accounts for nearly 3.5% of the GDP — that’s higher than the share of exports to the U.S. at 2% of the economy. More than 9 million Indians living in the Middle East play a major role in strengthening India’s finances. Geopolitical conflicts greatly impact the flow of remittances. The war hit countries have to increase their military expenditures.

1991 war hit Kuwait was forced to spend huge on military. It was around 117% of Kuwait’s GDP in 1991

Military spending as a share of GDP,
1949 to 2024 reported by World Bank. Military expenditure divided by gross domestic product, expressed as a percentage. Includes military and civil personnel, operation and maintenance, procurement, military research and development, infrastructure, and aid.

GDP for Kuwait went down to $10000 during Iraqi occupation. Then it increased to reach $80000 in 2012, the highest in the history of Kuwait. 

Many Indian professionals and skilled workers were employed in the oil and gas sector as well as infrastructure projects. The 1990-1991 Gulf War had a major impact on the Indian community in Kuwait.

Kuwait Oil & Gas Industry

Kuwait’s oil industry has undergone massive structural rehabilitation, expansion, and modernization projects since the devastation of the Gulf War in 1991.

The Oil & Gas sector, which represents roughly 90% of government revenue in Kuwait

Kuwait put efforts on rebuilding damaged infrastructure to investing in high-tech extraction and massive refining projects to achieve a production target of 4 million barrels per day (bpd) by 2040.

Repair cost of over $5 billion was spent on rehabilitating oil infrastructure, including well control and gathering centers after the Gulf War. Production capacity was fully restored to pre-war capacity by 1993.

Kuwait’s economy was boosted through three phases: 1991–1993 as Reconstruction Phase, 2000–2010 as Development & Modernization, and 2010–Present as expansion in oil export. Export share of crude oil was 64% of total energy exports in 2023. 

Indian Population in Kuwait

The Indian population in Kuwait has shown a stable and gradual increase over the years except during the Covid-19 pandemic period when the Indian population declined from 1,058,862 (in 2019) to 9,89,270 (in 2020). 

According to Indian Embassy in Kuwait, Indians constitute 21% (10 lakhs) of the total population of Kuwait and 30% of its work- force (approx 9 lakhs). Indian workers top the Private Sector.

Kuwait has witnessed the increase in the flow of Indian migrants since 1991 war time. The Indian population was around 88000 in 1991 and reached nearly seven times after two decades. It increased further in 2025 to reach nearly 11.5 times the 1991 population. GCC has seen the increase of nearly 4 times in two decades since the Gulf war in 1991. In 2025 it touched six times the 1991 population count in the GCC. 

Foreign Remittances, the key driver for India’s Economic Growth

CNBC News analysis: The Indian diaspora in the Gulf countries contributes nearly 38% to India’s total remittance inflows, according to a Citi report. Based on the inflows of $135.4 billion in financial year 2025, the share of gulf countries is to the tune of $51.4 billion.  A sharp decline [in remittance inflows] – particularly if combined with higher oil prices due to the conflict – would worsen India’s external position and could put some pressure on the rupee,” said Alexandra Hermann, lead economist at Oxford Economics.

Viewpoint of India’s Ministry of External Affairs

A large number of unskilled and semi-skilled workers migrate from India to various destinations in the Gulf every year making the region one of the prominent destinations to workers from India. 

India’s Ministry of External Affairs has highlighted the need for careful management of geopolitical risks, emphasizing the safety of the Indian diaspora and maintaining the steady flow of remittances to protect economic interests.

The MEA said that nearly one crore Indian nationals reside and work in the Gulf region, asserting that their safety was the foremost priority. The ministry highlighted that any significant disruption in the Gulf region carries risks for nearly one crore Indians and could have serious consequences for the country’s economy.

Conclusion

The safety of Indian diaspora in the war hit zones and the livelihood of their dependent families are very crucial for India’s diplomatic efforts to maintain the peace in the Middle East and sustain economic growth through foreign remittances.