India is among the largest contributors of expatriates across the globe. Majority of these Indian expats are located in Gulf countries, which have the largest portion of foreign workers within their territories. With the protectionist sentiments running high, there has been a mass exodus of expats from various parts of the world into the country, especially from the Gulf region, reducing the remittance inflow and increasing stress on the already suffering Indian economy. Yet, these can be seen as a blessing in disguise as it provides the opportunity for India to make use of this highly skilled workforce to achieve economic development and self-reliance.
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Who are expats?
- An expatriate or expat is an individual living and/or working in a country other than his/her country of citizenship, often temporarily and for work reasons.
- Expatriates usually earn more than they would at home and more than the local employees.
- Apart from high salaries, they are given additional benefits like relocation assistance and housing allowance to compensate for the emotional stress caused by the separation from family members.
Indian expats in the Gulf region:
- India is the largest country of origin of international migrants in the Gulf region and also the top recipient of remittances.
- India-Gulf region is the second-largest migration corridor in the world.
- Of the nearly 31 million non-residential Indians (NRIs), an estimated 5 million are working in Gulf.
- Indian expats constitute over 30% of the expatriate workforce in the Gulf states, where the proportion of non-nationals in the employed population is among the highest in the world.
What are the benefits of expats in the Gulf region?
For Gulf Countries:
- Gulf countries heavily depend on the foreign workforce across all sectors of the economy, from professionals to skilled workers and manual labour.
- Foreigners constitute almost 90% of the UAE population, two-third in Kuwait, half in Oman and Bahrain and one-third in Saudi Arabia.
- Thus, Indian expats’ contribution to the economic growth of the region is significant.
- They are crucial for these countries because of their ability to provide cheap labour force.
- They, along with other expats, have played a major role in sustaining GCC airlines, service industries, real estate and entertainment sectors.
- The expatriate population has the potential to soften the economic blow of future recessions.
- Since the 1970s ‘oil boom’ Indian migration to the Gulf region was a major source of national income and a revenue source for high-migration states like Kerala.
- Other dependent sectors like aviation and hospitality have benefited from increased migration to Gulf countries.
Why is the Gulf region becoming less attractive for expats?
- Over the past decade, there has been a decline in the number of Indian blue-collar workers migrating to Gulf countries.
- The causes for this trend can be attributed to various factors at both ends of the India-Gulf migration corridor.
- The falling wages due to declining oil prices, initiatives to increase employment of Gulf nationals in the private sector, increased work permit renewal fees and taxes, inflation etc. are some of the factors that resulted in the shrinking number of migrants heading to the Gulf.
- Additionally, the Indian government has also contributed to the decline by tightening procedures for sending workers abroad so as to safeguard them from being exploited.
- The issues faced by expats in these countries include poor living conditions, non-payment of salaries, non-issuance or renewal of residence permits, refusal to provide overtime allowance or grant weekly holidays. Hundreds were reported to have died due to heat stress.
- Yet, remittance grew over 14% in 2018 to $78.6 billion because of the following reasons:
- A large number of Indians remaining under contract and remitting a significant portion of their earnings
- Rupee depreciation
- Migrants brought wealth generated in the Gulf region back to India
- Migrant workers climbing social ladders and getting higher wages
- Indian expatriate population account for a sizable number of high-income earners
- The COVID-19 created an a crisis for Indian expats in the Gulf region.
- The situation faced by them is both a public health emergency and an economic crisis encompassing India and the Gulf region.
- The COVID-19 lockdown has significantly affected the migrant labourers who are low- and semi-skilled in the Gulf.
- Those workers who are in preventive quarantine or have tested COVID-19 positive or are stranded in India amid lockdown face the prospect of unpaid wages, dismissal and deportation.
- This unprecedented situation has further clouded the future India-Gulf migration.
What is Kuwait’s expat quota bill?
- The expat quota bill aims to introduce a ‘quota system‘ for foreign employees in Kuwait to address what is deemed to be a ‘demographic imbalance’.
- The demographic imbalance here signifies the problem of Kuwaitis becoming a minority in their own country.
- Currently, the Kuwait population is 3 million, with Kuwaitis making up 1.3 million and expats accounting for 3 million
- The bill intends to impose a cap on the number of expats to gradually decrease their dominance in the economy.
- The bill specifies country-wise caps, designating a quota of how many people of a certain nationality can be allowed to work in Kuwait.
- As per the bill, the Indian expatriate community, which is the largest in the country consisting of 1.45 million, should not exceed 15% of the national population.
- If the bill becomes a law, it will reduce Indian presence by 7-8 lakhs and will adversely impact India’s remittance inflow.
- It should be noted that Kuwait is the top source of remittance for India.
What are the implications of repatriation?
For Gulf Countries:
- The economic growth of Middle East countries is dependent on foreign workers.
- The outflow of expats could reduce government income from fees and value-added tax, leading to a decrease in government spending on wages and subsidies.
- To address the issue of high dependence on expats for economic growth, Gulf states are likely to hasten programmes to ‘nationalise’ jobs. However, these initiatives could make it even more difficult to jump-start economic growth.
- Gulf countries’ efforts to reduce dependence on oil, like Saudi Arabia’s bid to build entertainment and non-religious tourism industries, will need economic activities of expatriate residents and foreign visitors.
- Reducing the inflow of foreigners into the country could dampen these efforts.
- The measures to reduce dependence on oil and expatriate labourers like the increased investments in training national labour forces to enhance their contribution to the economic growth will not address the economic crisis caused by the COVID-19 pandemic and the fall in oil prices and demands.
- Thus, the expatriates’ influence in the region will not fall any time soon.
- India will face a dip in the remittances inflow due to job cuts faced by expats.
- According to a World Bank, remittances to India is expected to fall by a massive 23% from $83 billion in 2019 to $64 billion this year due to the pandemic.
- In 2018, remittances formed 9% of Indian’s total GDP.
- The worst of the impact is felt by Indian expats in Gulf countries because of the dip in oil prices and demands.
- Remittances are important for families of migrants back in India as they are the source of food, education, medicine and other needs.
- Thus, it has a direct impact on the Indian economy.
- The economic impact will be most severe in high remittance-receiving states.
- According to a recent study conducted among Kerala expatriates in Gulf countries, the majority are on the verge of losing jobs.
- It also revealed that the majority of these expats have no means of life when they return to India. They also do not own a house or land and are having liabilities like children’s education, marriage or loans.
- Apart from these, issues will also be faced by the Indian Aviation Sector as some of the airlines profited from the passenger traffic between India and Gulf countries.
- Also, the returning of workers who have lost their jobs will add to the unemployment rate in India.
What are the measures taken by the Indian government to address issues faced by expats in the Gulf region?
- The Indian government, with consideration to the issues faced by the Indian expats in the Gulf region, has taken measures to strengthen the institutional framework for protecting migrants’ welfare.
- At the domestic level, the Indian government has developed a series of pre-departure, protection-during-work-abroad and rehabilitation-upon-return migration safety awareness programmes.
- In 2015, the Indian government introduced a computerised system called ‘e-Migrate’ to regulate overseas employment.
- In recent years, the government has also set minimum referral wages to regulate wages of Indian migrant workers employed in various capacities in six Gulf states as well as 12 other ‘emigration check required’ (ECR) countries, whose labour standards are not migrant-friendly.
- These initiatives, aimed at safeguarding the interests of those seeking contractual employment abroad, have made Indian workers less attractive for recruiters and employers.
- The Indian government has also set up Indian Workers’ Resource Center in Sharjah, UAE to assist those who may face the risk of exploitation.
- Apart from these, diplomatic efforts are also taken to safeguard expats in the region.
- However, these government schemes are seen as reactive and piecemeal responses.
What is Vande Bharat Mission?
- Vande Bharat Mission is a massive repatriation operation of the Indian government that aims to bring back Indians stranded in various parts of the world.
- Indians are brought back on commercial flights and naval ships based on lists prepared by Indian embassies.
- The stranded include business travellers and tourists who were unable to return on time due to the grounding of the international flights.
- There is an increasing demand for return from professionals and labourers who have lost jobs due to the economic impact of the global lockdowns.
- The first phase of the mission focused on returning people who have ‘compelling reasons to return’. These include those whose visas are expiring, who face deportation, family emergencies, medical issues like pregnancy and students who have lost accommodation.
- These returnees bore the cost of travel and accommodations and were mandated to undergo institutional quarantine for 14 days.
- The high fares and the paid quarantine have been a major deterrent for the returnees.
- Approximately 8.78 lakh Indians have returned from abroad via Vande Bharat Mission during the four phases.
- The fifth phase of the mission started from August 1.
Do Gulf Countries need expats?
- In order to maintain economic growth, especially during the times when these countries are facing an economic crisis, there is a need for skilled human resources.
- The 6 Gulf Cooperation Council (GCC) – Saudi Arabia, the UAE, Bahrain, Kuwait, Oman and Qatar – have more than 52% of the non-nationals in their population, hosting the majority of the estimated 23 million migrant workers living in the Arab states.
- Their immigration policies to protect local jobs and control remittance outflow has failed to reduce size and volumes of non-nations as they continue to play a significant role in economic growth.
- Several studies show that the Indian community has consistently grown to reach 8.5 million.
- These austerity measures, aimed at pacifying local population, will not affect Indian workers in the Gulf countries in the long term.
- This shows that these countries need expats for their economic growth, at least for the near future.
What are the issues faced by Expats elsewhere during the pandemic?
- According to 2019 UN data, around 17.5 million Indian migrants are living across the globe.
- The COVID-19 pandemic has affected Indian expats in the US, the worst-hit country in the world by the outbreak.
- Job losses, costly healthcare, protectionist and inefficient government policies have hit the Indian expatriate community significantly.
- The H1B visa suspension by the Trump Administration to address the unemployment issue has been a big blow for Indian technology professionals as the majority of them are on the H1B visa programme.
- This, along with the massive layoffs amid the pandemic, has adversely impacted Indian expats.
- The job markets for expats in countries like the US, UK, Canada and Germany are unlikely to improve without an improvement in global economic conditions.
- This is because the past instances have shown that the businesses are likely to fire foreigners before native-born workers.
- During the 2008 financial crisis, the average unemployment rate for foreign workers in the EU jumped from 11.1% to 16.4%, far higher than that for native Europeans.
- Poor living conditions and lack of access to affordable healthcare has led to millions of NRIs suffering from COVID-19. It is estimated that nearly 2 million NRIs in 10 worst affected countries account for the maximum number of COVID-19 cases.
What can be the way forward?
- While India may not be able to make up for the remittance decline in the short-term, measures can be taken to gradually employ the overseas workers in high-value sectors.
- The situation provides a unique opportunity to address the brain drain caused by best minds moving to foreign countries in the past.
- A comprehensive study must be conducted to identify sectors that have seen the maximum job cuts among the Indian expats.
- Based on this study, focused efforts must be taken to create jobs in these sectors within the country itself.
- SAARC countries, which are among the largest beneficiaries of remittances, should to cooperate to deal with the remittance decline and unemployment among expats.
- IT sector jobs must be created to absorb Indians who have lost their jobs abroad.
- Apart from the IT sector, the construction sector accounts for a large number of expat workforce.
- Infrastructure sector can be boosted so that expats can find job opportunities within the country.
- Projects like Sagarmala can become a part of this initiative.
- India can collaborate with friendly countries like Japan to attract the much-needed investment for the infrastructure projects.
- A long-term plan must be put in place to reduce the future exodus of Indians, especially highly-skilled workers, to other countries in search of jobs.
- The expatriate workers who have now returned to India can be provided with the necessary incentives to help enhance the country’s entrepreneurial activities.
- The Indian government should assist Low- and semi-skilled expatriate workers who have been working in poor conditions in foreign countries. Long-term plan to address this issue is a need of the hour.
- The government can take measures to guarantee improved working conditions for expatriates in GCC countries, one of the largest sources of remittance.
- In order to prevent Indian citizens from being stranded outside the country for an extended period of time again, a standard operating procedure must be put in place to address the issue swiftly and efficiently.
The large-scale inflow of expats into India is a significant economic blow for the country in the short-term. However, at the same time, it also provides a rare opportunity to employ the expatriates in ensuring self-reliance and skill development.
Practice question for mains:
How can the mass exodus of expatriates provide an opportunity in ensuring Atmanirbhar Bharat? (250 words)