XM -Blog

The GCC Opportunity: A India Perspective

August 31st, 2015

Indians working in the GCC

Labour migration within the Arab region is not a new phenomena – it had started way back in the 1930’s. The ‘Oil Boom’ in the 1970’s had led to an extremely rapid increase in the demand for foreign labour as a result of the unprecedented development projects in the GCC. However, the late 80’s and through the 90’s was a turning point in migration for the region, with a large number of people moving in from Asia-Pacific to the oil-rich Gulf. According to UNDESA statistics, the GCC housed over 22 million migrants in 2013, an increase of 5 million as compared to 2010.

Indians were one of the early entrants into the GCC and significantly contributed to its growth and development. Even today, GCC countries are popular destinations amongst both skilled and unskilled work force from India, who are on the look out for employment opportunities and better standards of living. For instance, Dubai’s advanced infrastructure, thriving business environment and booming economy have attracted human capital from not only India, but different parts of the world, with expatriates comprising over 80 percent of Dubai’s population.

At approximately 2.26 million, Indians are the largest expat community in the UAE, comprising 30 percent of the country’s population. With such an eclectic talent pool, the country has become one of the most attractive destinations for business today, in the GCC. Similarly, Saudi Arabia too, has witnessed a significant Indian expat movement rate. Well paying salaries, a flourishing economy and openness towards expat workers, are the main drivers for the high volume of Indians choosing to work in the Kingdom.

Migration to the GCC has usually been characterized by the demand for blue-collared and unskilled workers to work on construction sites, transportation, shops, stores and as household domestic help. However, in recent years, the rapid development of infrastructure in the GCC has gained traction from investors. This led to a number of conglomerates from various sectors like international trade, banking, finance, tourism, retail, real estate, manufacturing and oil & gas, set up their business in the region. These companies are on the lookout for professionals with an enhanced skill set, which is in turn creating a high demand for qualified workers.

Once settled, these migrants send a considerable percentage of their income, back to their families in the form of remittances. This added revenue plays a very crucial role in the local economies of many Indian States.  Tamil Nadu, Kerala, Andhra Pradesh, Punjab and Uttar Pradesh are amongst the states that reap the benefits of this. Latest additions to this remittance league are Bihar and Rajasthan.

Rising migration flows comes with equally high remittance inflows. According to the latest World Bank report, India continues to be the leading remittance receiving country, that drew in USD 70 billion from its global migrant workforce in 2014. The largest chunk of remittance flows into the country ($12.64 billion) came from the United Arab Emirates (UAE), followed by the United States ($11.18 billion) and Saudi Arabia ($10.84 billion). Robust remittance inflows have also been instrumental in maintaining a growing level of foreign exchange reserves for India.

The combination of better standards of living, improved job opportunities, good pay packages and a tax free income in the GCC, will continue to attract Indians in the future too. Similarly, migrant Indians will continue to add value to the economy of the GCC. Hence, it’s a win-win situation for both regions today and will be so even tomorrow.