West Asia conflict sends Indian startups into wait-and-watch mode

Indian startups are turning cautious on expansion and investments in West Asia amid the ongoing conflict, with fintech and travel sectors seeing early stress while edtech remains relatively stable

The war in West Asia has now begun to weigh on Indian startup boardrooms.

 

Over the past two weeks, companies have turned cautious on expansion plans in the region — particularly in the United Arab Emirates (UAE), long seen as a key international destination — while also bracing for second-order effects in India.

 

Indian fintech major PhonePe has cited market volatility stemming from the conflict as a reason to temporarily defer its initial public offering (IPO), though concerns around valuations in the run-up to the listing also played a role.

 

iMeUsWe, a lineage-tech platform which links the past with the future through ancestry, communities, and astrology, said the company is witnessing a downside impact on demand. West Asia accounts for nearly 11.63 per cent of total new international users for the Pune-based startup.

 

“The UAE, Saudi Arabia, and Qatar are emerging as key markets for us but there was a sharp drop in new user registrations towards the end of February. March saw a partial recovery, but growth stabilised at a lower level and did not return to earlier highs. Toward the end of March, there are early signs of mild softening again,” said Vivek Desai, co-founder and chairperson.

 

The startup added that it has also postponed plans to introduce a US dollar-based pricing to better cater to international audiences and support expansion.

 

“There were plans to introduce USD-based pricing to better cater to international audiences and support expansion. Given the current geopolitical situation and expected short-term fluctuations in sign-ups, the approach is now more measured. The rollout is being reviewed and may be deferred to the next quarter until conditions stabilize,” Desai added.

Fintech impact

Several Indian companies are now reassessing their near-term strategy, with firms expecting a dip in demand for homegrown technology stack even as existing projects continue to operate normally.

 

Industry insiders said that while decade-old Indian incumbents in the region may not face significant disruption yet, smaller companies expanding to newer markets such as the UAE  and Saudi Arabia may put fresh investments and projects on hold.

 

The ecosystem is factoring in the scale of the ongoing conflict, travel restrictions in the region, and the possibility that expatriates working there may have temporarily returned to India.

 

“Almost everything has come to a standstill in the last one week or so. But, everybody is expecting this to be a temporary stop. Naturally, nobody wants to invest any money or make any large bets until there is clarity on how long this war will last,” a senior executive at a technology service provider said on condition of anonymity.

 

The conflict in the region comes at a time when several Indian fintech companies have identified West Asia as a lucrative market - given the 8-10 million expatriates of Indian origin living there - as part of their international expansion, alongside other geographies such as South East Asia and Africa.

 

Many companies are in the process of getting regulatory approvals in the region, and the war may dampen their growth plans for now.

 

“Consumer companies there may stall new projects, there might be a dip in demand for software as new projects are delayed for at least two months. Everyone is in a wait and watch mode as projects and investments are suspended for time being,” a source explained.

 

Others explained that even as routine digital payments continued to remain operational, travel as a sector has been hit particularly hard due to air travel restrictions in cities such as Abu Dhabi and Dubai, among others.

 

“For established players in the region, the disruption will be minimal. There are usual transactions that would happen routinely. But, travel to the region is affected where we see cancellations now,” another head of a payments major told Business Standard.

Edtech finds a way

Although several sectors grapple with unique challenges, ed-tech startups said that they continued to support operations for existing users and students, and maintained that business remained smooth for now.

 

Rohit Sharma, president of consumer business at UpGrad, said that given West Asia is a global talent hub, the demand for upskilling courses remains strong.

 

Sharma added that the company is likely to provide financial support to some learners to continue their learning momentum.

 

“Given the current situation as well as the holy month of Ramadan, our immediate priority is to be sensitive to the needs of our existing learners, who need flexibility, support and in some cases financial assistance to continue learning. The region is important to our long-term plans, but we want to move in a way that is thoughtful and respectful.”

 

The company recently strengthened enterprise partnerships for workforce training in the UAE and the broader MENA (Middle East and North Africa) region.

 

Sumeet Mehta, co-founder and chief executive officer (CEO) of ed-tech firm LEAD Group, which partners with schools, said: “Since the academic year 2026-2027 has already begun, our services and solutions continue to operate across schools in the Middle East without any disruption. We remain optimistic that the situation will be stabilised ahead of the next academic cycle.”

 

Some continue to remain watchful of the situation even as the conflict escalates.

 

“We are continuing to focus on progressing our existing projects and partnerships in the region, while remaining mindful of the broader geopolitical environment. Our priority is to be supportive of the ecosystem and maintain the momentum of the initiatives already underway. As the situation evolves, we will stay closely engaged and take thoughtful steps at the appropriate time,” said Krishna Kumar, founder and CEO, Simplilearn.