Indian Diaspora 20260325

India Insider: Why the Gulf Remains a Vital Economic Lifeboat

by with One Comment AssetsBen EzraExclusive ContentFeatured HighlightsIndiaInvestingUncategorizedWorld

Indian Expat Labour and Recalibration Realities

The skyline of Dubai, once a symbol of untouchable prosperity, now sits under a shadow of regional recalibration. As Reuters recently noted, Dubai has successfully transitioned to a non-oil economy, with oil accounting for less than 2% of its GDP. It is now a powerhouse of trade, high-end real estate, and financial services. 

However, its “backyard” – the Strait of Hormuz – remains a strategic bottleneck. With 20% of global seaborne crude passing through this narrow vein, the recent tensions in March 2026 have forced a shift in perception: the Gulf is no longer an insulated sanctuary, including Dubai where millions of Indians work and earn for their families in India.

Indian Diaspora 20260325

Indian Diaspora Gulf Representation

The scale of this “labour export” is enormous. As of early 2026, approximately 9.5 to 10 million Indians live and work across the GCC (Gulf Cooperation Council) countries. To put that in perspective, that is nearly the entire population of a country like the UAE, made up solely of Indian expats.

A Remittance Driven Economy

As per Government data sources, India remains the world’s top remittance recipient, with total inflows hitting a record $135.4 billion in the last fiscal year. And despite a rise in high-skilled migration to the US and UK, the GCC remains a juggernaut, contributing roughly 38% of India’s total remittances.

For states like Tamil Nadu, Kerala, and Maharashtra, which receive nearly 50% of these total inflows, it is a macroeconomic stabilizer that funds the current account deficit and keeps the Rupee from a freefall.

India’s Labour Market Paradox

But here is the real question, if people return to India due to the crisis in the Middle East, are there any “good quality” jobs waiting for them in India? The honest answer is no.

Youth unemployment remains elevated, particularly among graduates. Engineers in mechanical and construction fields face limited opportunities. Outside IT, and to some extent automobiles, there are not enough stable, high-paying jobs.

So people adjust. You will find postgraduates working in delivery jobs and informal sectors. I have personally spoken to Amazon delivery workers who told me they hold M.A degrees, or that they had worked in Dubai or Singapore before Covid and are now trying to leave again. This is becoming norm nowadays.

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Indian National Wages and Savings Compared to Expat GCC Averages

In many towns in India, migration itself has become an economic model. People move to Singapore, Malaysia, or the Gulf, and the money they send back drives real estate, consumption, and local business activity. In many such regions, the labour market feels tight, not because jobs are available, but because the workforce has already left.

The wage gap explains everything. A nurse or lab technician in India may earn ₹15,000–₹20,000 per month. The same person can earn close to ₹80,000 in the Gulf. A private school teacher in Villupuram city in Tamil Nadu state earns around ₹8,000.

While nominal wages are  2–2.5x higher in GCC, the true driver of migration is savings arbitrage , which can be 5–6x higher.

This reflects structural differences in labour productivity and capital intensity.

India has a large pool of educated labour. But instead of becoming an advantage, it has turned into a wage suppressing force. There is always someone willing to work for less. As a result, wages remain low and bargaining power stays weak.

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Percent of India’s Remittances From The GCC

At the same time, we are told growth is strong. Yes, the labour force participation is rising, but inequality is also increasing. A large share of employment remains informal and unstable. Inflation continues to erode purchasing power, and disposable incomes remain under pressure.

Right now, for many Indians, prosperous conditions are easier to find outside the country. Yes, the Gulf has risks. However, geopolitical tensions will come and go, and these are short-term disruptions.

Structurally, GCC economies will stabilize and grow again, and when they do, the flow of Indian labour will continue to pursue these opportunities. Because until India creates enough high-quality jobs at scale, migration will not slow down.

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India Insider: Manufacturing Strategy to Create Rural Jobs

by with No Comment BusinessFeatured HighlightsIndia

India Insider: Manufacturing Strategy to Create Rural Jobs

Across much of India’s rural landscape, manufacturing remains scarce and finding a solution for this remains a priority. While some towns do have small scale industries that offer jobs, this is still limited. As of financial year 2023, agriculture accounts for only 16% of India’s GDP, down sharply from around 35% in the 1990s, due to a structural shift toward services and manufacturing.

A large share of rural families still depend on agriculture, often engaging in farming and irrigation with modern equipment. However, marketing their produce remains a persistent challenge. Meanwhile, many rural workers are engaged in low-wage trade and commerce, often in informal settings such as small shops and roadside businesses. These roles typically offer limited income and little upward mobility. Falling real wages have pushed many to migrate to India’s urban centers or venture overseas to Singapore, Malaysia, and the Gulf countries in search of better livelihoods, aided by favorable exchange rates.

Capitalism and Efficient Manufacturing

Adam Smith, in his seminal work The Wealth of Nations wrote that, ‘it is not by gold or silver, but by labor that all the wealth of nations is created’. This fundamental idea underpins the modern economic thought that wealth is not derived merely from money, but from the productive capacity of people.

When capital is invested in a capitalist enterprise, it generates profits for the owner, provides wages for employees, and delivers returns (such as dividends) for shareholders. But this cycle of value creation depends on active and efficient enterprise, particularly manufacturing which has been missing or underdeveloped in many parts of rural India.

Unlike countries such as the United States, where people readily relocate across States, India faces some unique challenges. Like the European Union, India is a union of diverse linguistic and cultural regions. It is uncommon for a small business owner from Himachal Pradesh to directly access markets in Tamil Nadu or Karnataka due to language barriers, cultural differences, and logistical constraints. These frictions further isolate rural producers from wider markets.

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Garment Industry Values in India, Bangladesh and Vietnam

Strategic Solutions and the Role of State Governments

To revive rural economies, business people along with their state governments must identify and invest in strategic sectors that create jobs and add value. Kerala is a fine example: as one of India’s top spice-producing States, Kerala has the potential to establish local industries focused on spice processing, packaging, and export. Coordination between agriculture and manufacturing can generate employment, stimulate local economies, and enhance foreign exchange earnings.

Albert Hirschman, a development economist, highlighted this approach through his theory of unbalanced growth and economic integration. He argued that certain industries have strong reciprocal connections with other parts of the economy. By prioritizing sectors with good synergy potential, developing countries can achieve significant growth even with limited resources.

Growing competition from countries like Bangladesh and Vietnam which both enjoy favorable trade agreements do pose new challenges, this must be taken seriously by India and create a focus on forward looking international commerce. There will always be competition from distant enterprises and nations, this must be accepted and planned for via commercial insights.

Within India is Tiruppur, a city in Tamil Nadu, known as the ‘Manchester of South India’ due to its vibrant textile industry. The city has created an ecosystem of manufacturing that consistently offers higher real wages compared to other towns in the region. It has successfully shifted labor from agriculture to industry, thereby increasing productivity and income. It is a bright example and defines one way to make progress.

Protecting New Industries and Creation of Success

In his book How Rich Countries Got Rich and Why Poor Countries Stay Poor, economist Erik Reinert argues that nations develop not just by doing what they are currently good – such as agriculture or mining, but by nurturing industries that can become more productive long-term. Typically manufacturing and technology sectors lead to greater innovation and economic resilience.

Reinert provides numerous examples, like South Korea’s emerging growth in steel and its automotive industries, and Ireland’s rise in information technology where specific protections and support for young industries has led to long-term prosperity.

India’s rural transformation cannot rely on New Delhi alone. State governments along with business people must take the lead by identifying sectors that have the potential to foster high growth and employment. Helping to create local value chains, investing in infrastructure, training, and market access will build resilience in these communities. By encouraging small-scale manufacturing and leveraging regional strengths, the country’s rural areas can become engines of economic growth.