Overseas Travel Spending By Indians Falls 16% To $1.09 Billion In March On West Asia Turmoil

Overseas travel spending by Indians declined 16% to $1.09 billion in March 2026 from $1.31 billion in February, according to data released by the Reserve Bank of India (RBI) under the Liberalised Remittance Scheme (LRS).

The fall came on the back of the US-Iran war, which broke out in late February and triggered widespread airspace closures across West Asia, severely disrupting outbound travel from India. January 2026 had seen travel remittances at ~$1.6 billion, reflecting the sharp reversal in momentum within just two months.

What Drove The Drop

The airspace disruptions hit popular transit hubs like Dubai and Doha particularly hard. Indian travellers frequently use these routes for onward journeys to Europe and the US, and the operational restrictions that followed the conflict directly cut off a significant share of outbound travel.

The Airports Authority of India reported an 18.5% drop in outbound passengers in March, with only 3.4 lakh flyers going abroad compared to 65.4 lakh in March 2025. Rising airfares added another layer of pressure, making international travel packages less attractive for leisure travellers.

Holiday Spending Held Up Relatively Well

Despite the overall decline, discretionary spending on holidays and international credit card settlements proved more resilient. Indians spent $623 million under the ‘other travel’ category in March, accounting for nearly 57% of total travel remittances.

This was also the first time the RBI provided a granular breakdown of travel remittances after bringing credit card transactions under the LRS framework, which was tightened to close loopholes that allowed individuals to exceed the annual remittance ceiling of $2,50,000 through international credit cards.

Education-related travel spending, including fees and hostel expenses, totalled $450.16 million in March, while business travel, pilgrimage, and medical treatment together accounted for $21.39 million.

Other LRS Categories

Beyond travel, remittances for maintenance of close relatives rose to $389.78 million in March from $266.18 million in February. Spending under the studies abroad category, which includes fees for remote or correspondence courses, fell to $151.71 million from $175.68 million in February.

Indians also invested $440.22 million in overseas equity and debt instruments in March, up sharply from $265.99 million the previous month. Spending on overseas immovable property dippOverseas travel spending by Indians fell 16% to $1.09 billion in March 2026, as the US-Iran war disrupted West Asia airspace and dampened outbound travel demand, RBI data shows. ed to $38.68 million from $51.36 million in February.

Total outward remittances under LRS stood at $2.59 billion in March, with travel remaining the single largest category.

Full Year Picture

For FY26, total outward remittances under LRS came in at $29 billion, a marginal 2% contraction from $29.56 billion in FY25. Travel remained the largest category at $16.4 billion, though it recorded a 3.1% dip over the year.

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Recovery is expected to pick up from May, with airlines including Air India Express and IndiGo announcing restoration of services to Qatar, signalling a gradual return to normalcy on key routes.

Sources:

Outlook

Economic Times