VOI World/Ashwathy R
A proposal from the Donald Trump administration to slap a 5% levy on all money transfers sent abroad by non-US citizens has raised concern in New Delhi, because the United States is now the single-largest source of India’s inward remittances.
Economists quoted by The Hindu note that the US share of India’s remittance pool has climbed steadily over the past eight-to-nine years. A tax that high, they warn, could make many Indian workers think twice before wiring funds home or could reduce the amounts they send. Any shortfall matters: remittances help millions of households pay for food, health care and education, and they provide India with a stable flow of foreign exchange.
Even so, analysts say the overall damage is likely to be limited. Transfers from West Asia , especially the United Arab Emirates and Saudi Arabia, along with the United Kingdom and Singapore together account for a larger slice of India’s total receipts than the United States does. Those corridors would not be touched by a US-only levy.
It has been noted that remittances have proved surprisingly resilient through currency swings, interest-rate hikes and even the pandemic. Lower fees offered by digital money-transfer apps have encouraged migrants to keep sending funds despite rising costs elsewhere.
For now, the 5 per cent duty remains a proposal. How much it finally hurts India will depend on the details Congress writes into law—such as possible exemptions, who collects the tax, and whether migrants can reclaim any of it through existing tax treaties. Until then, officials and researchers will watch Washington closely, while banks and fintech firms weigh how to keep cross-border transfers affordable for the diaspora.
