The economic slowdown in the Gulf Cooperation Council (GCC) countries may have weakened precious remittances into India but a huge drop in the import bill more than compensated for it last year, Crisil research, an arm of the global rating agency Standard & Poors, stated in a report on Sunday.

Foreign exchange remittances to India fell to $68.9 billion in 2015 from $70.40 billion in 2014, largely as inflow from GCC fell 2.2%, the first such fall in six years. The drop in remittances from GCC is important because India receives more than half of such inflows from that region. A sharp drop in oil prices has made these economies vulnerable, impacting government revenues and household spending there. The Gulf is also one of India's largest trading partners and the fall in oil prices has had an impact on trade as well.

Both exports to GCC and imports into India have fallen. However, imports of oil from the region have fallen sharply, making up for the lower remittances as well as drop in exports. Exports to GCC declined 18.7% in the fiscal year ended March 2016, mainly led by petroleum products that India sells to the GCC.

However, imports dropped by a steep 34.5%, leading to a sharp drop in the trade deficit with the GCC. In the last three years, the Indo-GCC trade deficit has fallen 77% to $14 billion, actually improving India's external position with countries such as Saudi Arabia and the UAE. Also, though remittances from GCC have fallen to $36 billion, they are stickier than before and have resulted in a $22 billion trade surplus with those countries, Crisil Research economists Dharmakirti Joshi and Dipti Despande said. However, as oil prices rise and trade deficit expands faster than remittances, some of these gains could reverse, the agency said. But the Indian economy is much less dependent on remittances compared to its Asian peers like the Philippines, Pakistan, Bangladesh, Sri Lanka or Nepal.