Overseas travel spending by Indians fell 16% to $1.09 billion in March 2026, driven by the US-Iran war disrupting West Asian air routes and raising airfares.
Despite the drop, holiday and credit card spending remained strong at $623 million, accounting for over 60% of total travel remittances.
Outward remittances for overseas travel 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), as geopolitical tensions in West Asia disrupted air travel and dampened demand.
Geopolitical Turmoil Hits Travel Demand
The sharp monthly decline followed the outbreak of the US-Iran war in late February, which led to widespread airspace closures across West Asia. The Airports Authority of India reported an 18.5% drop in outbound passengers from India in March, with only 3.4 lakh flyers going abroad compared to 65.4 lakh in March 2025. Popular transit hubs like Dubai and Doha faced severe operational restrictions, directly impacting Indian travellers who frequently use these routes for onward journeys to Europe and the US.
Prior to the crisis, January 2026 had seen robust travel growth of 7.1%, with remittances touching $1.66 billion. The disruption also pushed up airfares significantly, making international packages less attractive.
Holiday Spending Remains Resilient
Despite the overall decline, discretionary spending on holidays and international credit card bill settlements proved resilient, accounting for $623 million — over 60% of total travel-related remittances in March. This marked the first time the RBI provided a granular breakdown of travel remittances after bringing credit card transactions under the Liberalised Remittance Scheme (LRS) framework.
The government had tightened regulations to close loopholes that allowed individuals to exceed the annual remittance ceiling of $250,000 through international credit cards.
Broader FY26 Trends and Outlook
For the full fiscal year FY26, total outward remittances under LRS stood at $29 billion, a marginal 2% contraction from $29.6 billion in FY25. Travel remained the largest category at $16.4 billion, though it recorded a 3.1% dip.
Industry observers note that travel demand had already begun moderating before Prime Minister Modi's recent appeal urging citizens to avoid non-essential foreign travel. Recovery is expected from May as major airlines like Air India Express and IndiGo have announced restoration of operations to Qatar, signalling a gradual return to normalcy.
