Economic Contributions of the Indian Diaspora in West Asia

Nearly 9 million Indians live and work across the six Gulf Cooperation Council (GCC) countries – the UAE, Saudi Arabia, Kuwait, Qatar, Oman, and Bahrain – making this one of the most consequential migration corridors in the world. Their presence is not just a demographic fact; it is an economic story that shapes two regions at once. From construction sites in Dubai to hospital wards in Riyadh, from remittance transfers that buoy India’s foreign exchange reserves to cultural clubs that keep traditions alive thousands of kilometres from home, the Indian diaspora in West Asia has built a complex and deeply rooted economic and social footprint.

From the oil boom to a diversified workforce 🔗

Indian migration to the Gulf did not happen overnight. Indian workers began arriving in significant numbers after the oil boom of the 1970s, when Gulf states – flush with petrodollar revenues but short on local labour – actively recruited workers from South Asia. India, with its geographical proximity to the Arabian Sea and a large working-age population, was a natural fit. What began as demand for manual labourers in oil fields and construction sites gradually grew into a far more varied workforce.

Today, Indian professionals find employment across IT, health and medical care, engineering, real estate and construction, and retail, reflecting how Gulf economies themselves have diversified beyond oil dependence. This shift mirrors a broader transformation in the socio-economic profile of Indian migrants – from predominantly unskilled and semi-skilled workers to an increasingly mixed workforce that includes doctors, engineers, accountants, and entrepreneurs.

Sectoral dominance: where Indians work in the Gulf 🔗

Indian expatriates are predominantly employed in construction, healthcare, education, finance, and information technology, and their contributions have been central to transforming the infrastructure and service sectors of Gulf nations.

Construction and infrastructure 🔗

Indian labourers form the backbone of the construction industry in the Gulf. Landmark projects – from Dubai’s iconic skyline to Qatar’s FIFA World Cup stadiums – were built with substantial Indian labour. Around 70% of Indians work as labourers or technicians in the construction sector, as domestic workers, or as drivers, though this proportion is shifting as skilled migration increases.

Healthcare and professional services 🔗

Indian doctors, nurses, and medical professionals play a crucial role in the healthcare systems of Middle Eastern countries, with many hospitals and clinics employing Indian medical staff for their expertise and training. Beyond healthcare, Indians are key to the UAE’s retail, financial services, manufacturing, and transport sectors, with a sizeable minority engaged in professional services and entrepreneurship.

Business and entrepreneurship 🔗

Indian entrepreneurship in the Gulf has produced some of the region’s most recognised business names. Indian entrepreneurs in the UAE have established successful national franchises, including the LuLu Group International, Landmark Group, Jashanmal, Ajmal Perfumes, Jumbo Electronics, and Aster DM Healthcare. These are not niche businesses – they are household names across the GCC, employing tens of thousands of people of multiple nationalities. This entrepreneurial layer sits atop the broader Indian workforce and represents the upper end of a wide socio-economic spectrum within the diaspora.

The remittance engine: numbers that matter 🔗

Perhaps the most tangible measure of the Indian diaspora’s economic contribution is the volume of money sent back to India. In fiscal year 2023-24, Indians residing abroad sent home $118.7 billion in remittances, according to the Reserve Bank of India. That figure has more than doubled from $55.6 billion in 2010-11, reflecting both the growth of the diaspora and the rising earnings of Indian workers abroad.

Despite making up only about one-quarter of India’s overseas population, Indian nationals in Gulf states send almost 40% of the country’s bank remittances – a disproportionately high share. Among Gulf nations, the UAE leads at 19.2%, followed by Saudi Arabia at 6.7% and Qatar at 4.1%.

Why do Gulf-based Indians remit so much relative to their numbers? The answer lies in their living arrangements. The majority travel to Gulf countries alone, focusing entirely on work, since there are no prospects of obtaining citizenship – unlike in destinations like the US or UK. Around 80% are living alone, either unmarried and sending money to parents, or married and supporting families back home. This singular focus on earning and saving translates directly into higher remittance flows.

Remittances and India’s macroeconomy 🔗

Remittances have become the second-largest source of external financing for India after IT and service exports, acting as a buffer against trade deficits and global economic volatility. Remittances have contributed about 3 to 4% of India’s GDP since 1999-2000, making them a structural pillar of the national economy rather than a marginal income source. At the household level, these transfers fund children’s education, healthcare, housing construction, and debt repayment for millions of families – particularly in states like Kerala, Tamil Nadu, Andhra Pradesh, Uttar Pradesh, and Bihar.

Informal channels and underestimation 🔗

The official figures, substantial as they are, likely undercount the true volume of Gulf remittances. Given the proximity and availability of cheap flights, money is often brought from places like Dubai informally, without relying on bank transfers. Informal flows could be as large as the formal channel, meaning all official estimates are underestimates. This is a structural feature of the India-Gulf corridor that distinguishes it from remittance flows from Europe or North America, where informal transfer is far less feasible.

Shifting dynamics: the Gulf’s changing share 🔗

The Gulf’s dominance in India’s remittance picture, while still significant, has been gradually receding. Advanced economies – particularly the US, UK, Singapore, Canada, and Australia – together accounted for more than half of India’s remittances in 2023-24, a historic shift that reflects changing migration patterns toward a more skilled Indian diaspora.

This does not mean Gulf migration is declining in absolute terms. The UAE maintained its position as the second-largest individual source country for remittances, with its share rising from 18% in FY21 to 19.2% in FY24. What has changed is the composition of the broader diaspora, as more Indians settle in higher-income economies. Experts believe the Gulf will continue to be a major remittance corridor for at least the next 15 to 20 years, driven by ongoing infrastructure projects and economic diversification in GCC states.

Socio-cultural associations: community life in exile 🔗

Economic contribution alone does not capture the full picture of the Indian presence in the Gulf. The large Indian community in the UAE, along with comparatively lenient laws, has allowed Indians to more or less practise their native cultures in the country. This has led to the formation of a dense network of socio-cultural associations that serve as anchors of identity for expatriate communities.

The India Social and Cultural Centre (ISC) in Abu Dhabi traces its origins to the Unity Club, formed in 1967 by pioneering Indian residents to create a space for social and cultural activities and to maintain a link to their homeland. It remains one of the premier community organisations for Indians in the UAE capital. Similarly, the Indian Association Sharjah, established in 1979, was founded with the explicit goals of promoting Indo-Arab friendship and providing educational and socio-cultural facilities for Indian children in the area. It now runs Indian schools in Sharjah and manages community welfare services ranging from passport assistance to supporting Indians in legal distress.

Cultural associations such as the India Club, Indian Association, Goan Cultural Society, and numerous Keralite associations support cultural networks of Indian sub-communities in the UAE. Schools such as the Abu Dhabi Indian School and The Indian High School, Dubai provide Indian curricular education to expatriate students. These institutions do more than preserve culture – they create a structured community infrastructure that supports welfare, education, and social cohesion among a population that largely cannot attain permanent residency.

Cultural influence and the return effect 🔗

The cultural exchange flows in both directions. What labour migrants bring back often has a profound influence on local developments – hybrid forms of music, dance, popular culture, cuisine, and architecture. The influence of Gulf migration on Kerala is visible in the Arabic words adopted into local culture, in the naming of buildings, and in the construction of large homes by successful returning migrants. Entire districts of Kerala – Malappuram, Palakkad, Kasargod – have been socio-economically transformed by Gulf remittances and returning migrants.

The structural challenge: dependence and vulnerability 🔗

This economic success story has its fault lines. The Gulf migration model is built on temporary contracts, with citizenship off the table for almost all Indian workers. The kafala system ties workers’ legal residency to a specific employer or sponsor, ensuring strict state and employer control over migrant labour, often at the expense of workers’ rights and welfare. Certain occupations have come to be culturally defined as appropriate only for non-nationals, creating a kind of occupational stratification along nationality lines that leaves Indian workers – especially unskilled and semi-skilled ones – with limited upward mobility within the host society.

At the same time, in GCC countries, opportunities for low-skilled workers are shrinking due to changes in automation and nationalisation policies, raising questions about the long-term sustainability of Gulf migration for those at the bottom of the skills ladder. For now, however, the India-Gulf corridor continues to function as one of the world’s most economically significant migration routes, with consequences felt from construction sites in Qatar to villages in Kerala and Bihar.

What do you think? The Indian diaspora in the Gulf sends nearly 40% of India’s total remittances despite being a quarter of its overseas population – does this level of economic dependence on a migration corridor that offers no path to citizenship create a structural vulnerability for both migrants and India? And as Gulf economies automate and nationalise jobs, how should India’s migration policy evolve to protect the millions who depend on this corridor?

References

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