Remittance Trends In India: What’s Driving the Growth?

India is widely recognized for being in the leading position among countries receiving the highest amount of remittances globally. But what is particularly remarkable is that India has maintained this position consistently since the early 2000s. And that too without missing a single year, with annual inflows increasing year after year.

Although it might appear that this growth is solely due to an increasing scale of India’s global diaspora, there is a lot more than that! In this article, we will explore the remittance trends in India and the true reasons behind this growth.

India’s Remittance Breakdown: Top States and Source Countries

According to the World Bank, India received around $137.67 billion in remittances in 2024, surpassing Mexico and China. Further, among the states, Maharashtra is the top recipient, accounting for 20.5% of the total remittances. Kerala ranks second on the list, with 19.7%, followed by Tamil Nadu (10.4%), Telangana (8.1%), and Karnataka (7.7%).

In terms of the source of remittance funds, the United States is the largest contributor to remittances in India, accounting for 28% in 2024. Moreover, together with the United Kingdom, both countries have contributed 40% of the total money coming into India through banks. According to reports from 2023 to 2024, the overall share of Gulf Cooperation Council (GCC) countries (UAE, Saudi Arabia, Kuwait, Qatar, Oman, and Bahrain) is 38%, collectively contributing to the remittance growth in India.

Key Remittance Trends In India

Indian remittance markets have faced significant changes in the past few years that have somehow assisted the remittance market as well. These trends stem from changes in the migration patterns, regulatory requirements, preferences of remitters, and much more.

Here are the key remittance trends that can be seen currently in the remittance market:

Digital Remittance Solutions

It is very convenient to transfer funds to India from any part of the world. Earlier, when people relied just on banks to physically visit branches to collect and send money, now platforms like Wise, Western Union, and Remitby have come into existence, offering digital remittance solutions. Their mobile applications have all the features that allow swift online money transfers without the need for physical visits to banks or exchange counters.

Declining Transfer Costs

Now sending money overseas is much more affordable than it used to be. As the banks relied on traditional networks to send money, this involved multiple intermediaries, adding significant cost to the overall money transfer. With digital bank transfers, money is transmitted directly from the sender to the receiver’s bank account, involving reasonable service charges by the remittance platform.

Diversification of Source Countries

Historically, just the Gulf countries and the United States contributed to the total remittance influx to India. Although these countries still hold lion’s shares when it comes to the total remittance flow, there has been notable growth from countries such as Europe, Canada, Australia, and other parts of the world. It is mainly because of the migration of skilled professionals, IT workers, and students to these countries due to the rise in career and educational opportunities.

Formalization of Transfers

Many illegal service platforms used to offer money transfer services to India, which not only operated unlawfully but also imposed exorbitant transfer fees and even engaged in fraud. Now, the AML (Anti-Money Laundering) and KYC (Know Your Customer) laws are stricter than ever. Reliable remittance software development companies like Tech Remit incorporate these compliance protocols into their platforms to ensure legal and safe money transfers.

Why Are Remittances So Important for India?

Did you know that remittance contributes to around 3.52% of India’s GDP? This single statistic conveys a lot about the contribution of remittance funds in India. They aren’t just financial transactions but are crucial for the country’s economy as well as families. Here’s how:

• Most families in India have as their primary source of income the money they receive from their loved ones working overseas. They use this money for food, shelter, clothes, and other basic necessities for living.
• India has a big real estate market filled with ample opportunities for investors around the world to maximize their revenue. That’s why
• Most of the large-scale transfers are from investors around the world for investing in lucrative properties.
• Many entrepreneurs and businesses also remit funds to start international business ventures in India, contributing to the development of many other sectors.
• Most Indian students receive funding for their education, whether it is for school fees, university education, skill development, or something else, across borders.
• Remittances, as a reliable source of capital inflow, help to strengthen foreign exchange reserves and stabilize the Indian rupee, even during market fluctuations.

Technological Advancements Driving Growth In the Remittance Industry

Technology has made it possible to send money to India from any part of the world with just a snap of the fingers, and that too securely and cost-effectively. Let’s discuss its role in much detail:

• With digital remittance services, customers can easily initiate money transfers through remittance software, track them, and receive funds in their bank account or platform wallet quickly.
• Remittance platforms provide money transfer services around the clock, whereas banks used to only offer them on business days.
• UPI’s smooth infrastructure is quite common inside the country for carrying out quick payments. But now many countries are also integrating it into their cross-border payment networks to offer UPI-based payments to India.
• Blockchain technology is highly acclaimed for providing transparent, quick, and decentralised transactions. This same principle offers significant advantages in international money transfers, allowing funds to be sent in mere seconds.
• Artificial intelligence is used to ensure AML/KYC compliance, automate fraud detection, and respond to customer inquiries regarding remittance transactions.

End Note

The Indian remittance market is growing immensely as a result of increasing economic opportunities abroad, strong familial connections, and rapid technological adoption. Moreover, digital remittance services have transformed the market, making international money transfers quick, affordable, and convenient as well. It hasn’t only helped families that rely on remittance as their major source of income but also strengthened India’s economic stability and global financial standing.

Stay tuned with Tech Remit for useful insights like this!

Also Read : Top 10 Highest Remittance-Receiving Countries in the World