Around 6,50,000 Indian nationals live and are now working in Qatar, who outnumbered native Qataris by nearly 2:1.
Major airlines on the Arabian Peninsula have announced they will stop flying to Qatar as the Gulf crisis deepens.
Jane Kinninmont, a senior research fellow at London's Chatham House, said the renewed tensions were not clearly linked to "something new that Qatar has done".
Qatar was also expelled from the council, which includes Saudi Arabia, the UAE, Bahrain, Oman and Kuwait, CNN reported. The Saudi Press Agency stated that the said nations made the move because they believe that Qatar has been supporting "Iranian-backed terrorist groups" that are based in Eastern part of Qatif and Bahrain. The country has only around 270,000 citizens, but is the world's biggest producer of liquefied natural gas, sharing a vast underwater field with Iran.
The Qatar Stock Exchange tumbled eight percent on opening and eventually closed down 7.58 percent.
The UAE offered a similar analysis of the diplomatic measures, citing "Qatar's continued support, funding and hosting of terror groups, primarily Islamic Brotherhood, and its sustained endeavors to promote the ideologies of the Islamic State and al-Qaida across its direct and indirect media".
Qatar's Ministry of Foreign Affairs said the countries' decisions are "unjustified" and vowed its citizens would not be affected.
"Airspace will be impacted?by flights being re-routed, especially for Qatar Airways who will no longer be allowed to use the expansive airspace of Saudi Arabia on flights to Europe and North America", he said.
Etihad said on its website Monday its last flights "until further notice" would leave early Tuesday morning.
More broadly, two key factors drove Monday's decision: Qatar's ties to Islamist groups, and the role of Iran, Saudi Arabia's regional rival.
"I do not expect that this will have any significant impact, if any impact at all, on the unified fight against terrorism in the region or globally", he told reporters while on a visit to Australia.
The BBC's Simon Atkinson says the suspension of flights may cause a major problem for the airline, forcing it to alter flight paths and inevitably add time to some flights. Iran's Foreign Minister Mohammad Javad Zarif also urged Qatar and its neighbors to talk.
In March 2014, Saudi Arabia, the United Arab Emirates and Bahrain recalled their ambassadors from Qatar over that rift.
The closure of Emirati, Saudi and Bahraini airspace is likely have a disastrous impact on Qatar Airways.
Trump nevertheless met with Qatar's emir during the Saudi conference last month.