Travel drives foreign spending to a 10-month high in July

September 24, 2024 | 0 Comment

In July 2024, India’s outward remittances hit US$ 2.8 billion, a 10-month high and a 16.7% year-on-year increase. The surge was driven by overseas travel spending, which made up 60% of total remittances, fueled by student travel and leisure activities. Despite earlier declines due to tax collection at source (TCS), remittances under the Liberalised Remittance Scheme (LRS) have grown significantly, reaching US$ 31.7 billion in FY24

In July 2024, outward remittances by Indians reached US$ 2.8 billion, the highest in 10 months and a 16.7% increase year-on-year. This surge was mainly driven by a rise in overseas travel spending, which made up 60% of total remittances, compared to 51% in July 2023. Travel spending hit US$ 1.6 billion in July, up from US$ 1.3 billion in June and an average of US$ 1.2 billion in the first quarter, largely due to students traveling for summer admissions and an increase in leisure activities like destination weddings.

While travel was the largest contributor, other remittance categories also grew. Investments in equity and debt rose by 108.2% to US$ 120.2 million, and medical treatment remittances increased by 104.3% to US$ 8.6 million, though these categories remain a smaller part of the total. Conversely, remittances for deposits fell by 16.8% compared to the previous year.

This rise in July followed a period of reduced overseas spending triggered by the government’s tax collection at source (TCS) on foreign exchange remittances, implemented in October 2023. Consequently, monthly overseas spending had stayed below the previous year’s average of US$ 2.6 billion, with travel spending averaging under US$ 1.4 billion per month since the TCS introduction.

Over the past decade, Indian spending abroad under the Liberalised Remittance Scheme (LRS) has surged, growing from just over US$ 1 billion in FY14 to over US$ 31.7 billion in FY24, driven by more Indians traveling abroad and a rise in students pursuing education overseas.

Travel drives foreign spending to a 10-month high in July