Bad news for Indians in US as Donald Trump…, India could lose Rs 1540811700000 per year due to…
Trump remittance tax: India could potentially lose up to $18 billion dollars annually in foreign remittances if US President Donald Trump’s proposed 5% remittance tax law comes into effect in the United States. According to economic think tank, Global Trade Research Initiative (GTRI), Trump’s proposed remittance tax could directly impact India’s foreign exchange reserves (Forex), and the Indian rupee.
India could $18 billion in Forex annually
Around 28 percent of India’s $120 billion remittances in 2023-24 came from the US, but this will likely decline if the remittance bill becomes a law, making its costlier for Indians in the US to send money back home, said GTRI founder Ajay Srivastava. The economist predicted that India could lose between $12-18 billion if remittances from the US fall by 10-15 percent.
Srivastava asserted that less remittances means less inflow of the US Dollar in India’s foreign exchange market, negatively impacting the Indian Rupee, which would force repeated interventions from the Reserve Bank of India (RBI) to stabilize the currency. He predicted that the rupee may fall about Rs 1.5 against the dollar, in wake of reduced remittances.
These states will be most impacted
According to the GTRI, states like Uttar Pradesh, Bihar, and Kerala, where millions of families are dependent on foreign remittances, may bear the brunt of Trump’s new proposed tax law.
“Lakhs of families in these states depend on remittances, using these to meet expenses like education, healthcare and housing. But a sudden decline (in remittance) could drastically limit their spending power, and put more pressure on the Indian economy, which is already facing the challenges of global uncertainty and inflation,” Srivastava said.
The economic expert highlighted that Trump’s proposal would have a global impact, as it could disrupt an important financial channel necessary for global development. He said the tax would drastically reduce the income of middle class and lower middle class families in developing and under-developed nations, and also weaken demand in smaller economies already struggling with inequality and instability.
Notably, India has proposed to reduce the cost of cross-border capital flow or remittance in the World Trade Organization (WTO), but New Delhi’s efforts may suffer a setback if Trump remittance law is implemented in the US.
What is Trump’s remittance tax?
US President Donald Trump has proposed to impose a 5 percent tax on remittances sent from the country. Trump’s proposal is part of a larger bill called The One Big Beautiful Bill’, which was introduced in the US House of Representatives on May 12. The proposed tax will apply to to non-US citizens who send money abroad, including green card holders and temporary workers on H-1B or H-2A visas.
This tax will not be imposed on US citizens.
News