For South Asia, Iran is not a faraway conflict, Pg12

Key Highlights:

• South Asia relies heavily on remittances from GCC countries and energy imports from West Asia.
• India received $135 billion in remittances in FY 2024-25, with about 38% from GCC countries.
• Bangladesh received over $30 billion in remittances in 2025, nearly half from West Asia.
• A $10 increase in crude oil prices could widen India’s current account deficit by about 0.3% of GDP.

Detailed Insights:

• Remittances act as a financial buffer for South Asian economies, supporting consumption and stabilizing balance-of-payments.
• Instability in the Gulf region could reduce investment and labor demand, negatively impacting South Asian economies.
• India sources about half of its crude oil from Gulf countries, while Bangladesh, Pakistan, and Sri Lanka depend on the region for petroleum products and LNG.
• Disruptions in the Strait of Hormuz can trigger volatility in global energy prices, increasing import costs for South Asian economies.
• Rising fuel costs increase subsidy burdens and strain public finances in countries like Pakistan and Sri Lanka.
• Export-oriented economies like Bangladesh could see reduced competitiveness due to rising freight costs and longer transit times.
• Diversifying LNG suppliers and expanding renewable energy sources can reduce South Asia's exposure to supply disruptions.
• India aims for 500 GW of non-fossil fuel power capacity by 2030 to reduce dependence on imported energy.

Key Concepts Involved:

• Remittances: Money sent by migrant workers to their families in their home countries.
• Current Account Deficit: The shortfall when a country's import of goods, services, and capital is greater than its export.
• Geopolitical Risk: The risk associated with political events or instability that can affect international relations and economies.