India Tops Global Remittance with $125 Billion in 2023

June 29, 2024

In 2023, India achieved the highest record of remittance inflows globally, amassing USD 125 billion. Strategic economic deals and strong job markets in other countries, especially in the US, UK, and Singapore, were the main things that caused this rise. One important mutual agreement with the United Arab Emirates (UAE) stood out. It made it easier for the two countries to use their currencies in trade.

What is Remittance Trends?

According to the Migration and Development Brief from the World Bank, more money is being sent back to India. This is helping to increase the share of money coming into South Asia, from 63% in 2022 to 66% in 2023. Even though the rate of growth was supposed to drop from the previous year’s high of 24.4% to 12.4%, this rise showed big growth. One reason for this growth is that inflation is going down and there are lots of job chances in high-income countries, where a lot of highly skilled Indian professionals live.

Impact of Economic Agreements on Remittances

India and the UAE signed a deal in February 2023 to encourage trade in the Indian Rupee and the Emirati Dirham. This was a very important step. This agreement makes trade and money transfers easier and less dependent on third-party currencies, which could lead to more and faster money transfers. It turned out that the UAE was India’s second-largest source of remittances, which shows how important this economic relationship is.

Global Perspective on Remittance Flows

Many businesses, especially those in low- and middle-income areas, depend on remittances coming in. They are very important for keeping current accounts and budget deficits in check. It is expected that global remittances grew by 3.8% in 2023, which was less than the big growth seen in the two previous years. This slowdown is a sign of bigger problems in the economy, like rising prices around the world and weak growth chances, that could affect migrants’ real incomes in 2024. This summary of the World Bank report shows how India’s strong role in global remittances is driven by smart economic partnerships and strong global labor markets that play a big role in its socioeconomic framework.

About the India-UAE bilateral trade agreement

Trade Expansion Goals: The India-UAE Comprehensive Economic Partnership Agreement (CEPA), which was signed in February 2022, wants to double trade between the two countries to $100 billion in five years. Starting in May 2022, the deal aims to lower tariffs on 80% of goods, and over time, it will cover 90% of trade goods.
Sectoral Focus and Investment: Key industries like petrochemicals, gems, jewelry, and fabrics are part of CEPA, which means that big investments will be made in infrastructure. This important agreement should strengthen business ties and encourage growth in many areas.
Innovation and Duty-Free Access: The deal also makes it possible for businesses to work together in new areas like AI, blockchain technology, and fintech. Notably, CEPA wants to let 90% of India’s goods go to the UAE duty-free, which will make trade between the two countries easier.

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