Continuing weakness in oil prices may impact remittances from Gulf countries into India, a report by domestic ratings agency Crisil said.
However, it added that low oil prices have reduced the country's trade deficit with Gulf Cooperation Council (GCC) countries.
"The Gulf lost some charm for India last fiscal, both as a destination for exports and a source of remittances, but a hard look at the numbers suggests the situation isn't as bad as it appears," its research arm said in a note.
"While falling oil prices have curbed India's exports to GCC, imports from the GCC have also fallen steeply. In FY16, imports from these countries fell at a faster clip of 34.5 per cent," it said.
Compared to this, the exports have declined 18.7 per cent, since petroleum accounts for a bulk of the exports, while the remittances from the region were also down 2.2 per cent to USD 35.9 billion as compared to the previous year.
Crisil said the dip in remittances is lower at 2.2 per cent as compared to the 47 per cent drop in oil prices. It stressed that remittances from GCC countries have been sticky in the USD 36-billion range, which has ensured that there is a surplus of USD 22 billion even after accounting for the trade deficit.
The sticky remittances also point to the de-risking of economies where GCC members are looking at revenue mobilisation beyond oil dollars, it said, adding that over 50 per cent of the remittances from Saudi Arabia and UAE, which have lesser reliance on oil, helped India.
"With the slide in exports is more than matched by the slide in imports, India's trade deficit with GCC as well as well as the rest of the world has narrowed," it further said.
Looking ahead, it said oil prices are only expected to recover from here. But if the oil prices remain weak for an extended period, they can result in fiscal stress in the GCC countries and impact inward remittances into India, it said.