The NRIs and Indian-origin people in the West have long been seen as India’s soft power due to their remarkable success in Western countries. But increasingly, they are also giving India hard power: the power of money. A recent analysis by the Reserve Bank of India (RBI) shows Share of inward remittances from advanced economies, including the US and the UK, has risen, surpassing that of Gulf economies in 2023-24, reflecting a shift in migration pattern towards skilled Indian diaspora. India’s remittances, which have more than doubled from $55.6 billion in 2010-11 to $118.7 billion in 2023-24, give the country hard power. While financing around half of India’s merchandise trade deficit, net remittance receipts have been an important absorber of external shocks during this period. High remittance inflows contribute to financial stability of the country.
Rise of the white-collar NRI
Indian migrants in the Gulf Cooperation Council (GCC) countries account for around half of the total Indian migrants in the world. The United Arab Emirates (UAE) is the largest hub for Indian migrant workers engaged primarily in blue-collar jobs which are dominated by the construction industry followed by healthcare, hospitality, and tourism.
The RBI article said there is a gradual shift seen in remittance sources. “The results of the survey highlight the gradual shift in dominance of India’s remittances from the GCC countries to the AEs (advanced economies) particularly the US, the UK, Singapore, Canada and Australia which together accounted for more than half of the remittances in 2023-24,” the article said.
The GCC countries (UAE, Saudi Arabia, Kuwait, Qatar, Oman and Bahrain) together contributed 38 per cent to total remittances received by India in 2023-24, higher than its share recorded in 2020-21 (COVID-19 pandemic year).
The share of the US in India’s total remittances remained largest, rising to 27.7 per cent. The UAE, the largest hub for Indian migrant workers, maintained its position as the second largest source of India’s remittances, with its share increasing from 18 per cent in 2020-21 to 19.2 per cent in 2023-24. “This is in stark contrast to the US where Indian migrants are mainly employed in the white-collar jobs, thus explaining the higher remittances received from US despite the lower number of migrants as compared to the UAE,” the article said.For Indians, opportunities to work in foreign countries first started pouring in a big way during the seventies when the oil boom in the Persian gulf countries created openings for Indian semi-skilled workers. This led to some initial pick up in remittances. Later in the nineties, the IT boom created a huge market for Indian skilled IT professionals in advanced economies in North America and Europe. This led to a surge in remittances to India leading India to emerge as one of the top recipients of remittances.The success of the NRIs who have reached top positions in several fields in advanced countries has led to more remittances from those countries.
The astounding success story of Indian-Americans
A report by BCG and Indiaspora, a nonprofit organization comprising of global Indian origin leaders, has numbers that narrate the desi success story in the US: 51 lakh Indian diaspora at present has a median income of $136,000, which is almost double the US average, and they account for just 1.5% of the US population but paying 5-6% of US taxes. The desi dominance is in all fields and not just technology.
“One in 10 physicians in the US is an Indian-American, serving 30% of patients… Sixty per cent of all US hotels are owned by members of the diaspora, generating $700 billion in revenue and creating over 40 lakh jobs… Indian Americans own an estimated 35-50% of all convenience stores in the US, representing $350-490 billion in revenues each year…. Starting with one unicorn in 2010, India has seen exponential growth reaching 114 unicorns as of March 2024… India is the leading country of origin for immigrant-founded unicorns in the US in the last five years,” the report titled “Small Community, Big Contributions, Boundless Horizons” said.
A large number of Indians went to the US for coding jobs over the past couple of decades. But because the education in schools and colleges in India is not only about Maths and Science, they had learnt to negotiate; tackle real-life problems and make an overall societal impact, Rohit Jain, CIO, Harvard Business School Alumni Association, had told TOI two years year. “The fact that we knew programming well also helped many Indians to make a natural progression to management roles in the US. And, of course, having degrees from top American management schools brought more to the table with many Indian Americans making big transitions to CEO and senior VP positions,” Jain had said.
Indians are among the biggest leaders of innovation in Silicon Valley and America’s tech industry cannot survive without them, the CEO of the Silicon Valley Central Chamber of Commerce Harbir K Bhatia had told news agency PTI in an interview in last year. “Indians are one of the biggest drivers of innovation in Silicon Valley,” Bhatia said in the interview. “The tech industry here wouldn’t be the same without them.” Bhatia said nearly 40% of Silicon Valley CEOs or founders hailed from India. She emphasized the impact Indian-Americans have on major corporations. “They’re leading companies like Google, YouTube, Microsoft – at the CEO or CXO level,” Bhatia said. “This doesn’t happen by accident.” Bhatia attributes this success to a strong cultural emphasis on hard work and achievement.
Why NRIs are increasingly investing back home
Increasingly, the NRIs are investing in India across asset classes. In an interview with ET, Harsh Gahlaut, Co-founder & CEO, FinEdge, listed four reasons why India is currently attracting significant interest from NRI investors.
Rise of the Indian Economy led by favourable demographics: India’s rapid economic growth, marked by the tag of the world’s fastest-growing major economy, has been a big factor for the country attracting investments from all over the world. Being tipped as a huge consumption and manufacturing story India is projected to become a 5 trillion-dollar economy by 2025. With structural reforms and huge spending on infrastructure, the government of the day is ensuring that the right growth drivers are in place for India to become a developed economy by 2047. We are fast approaching tipping points in higher per capita income which should lead to exponential growth over the next two decades.
Performance of the Indian Stock Market: The Indian stock market has consistently delivered strong returns over the past years and there has been large retail participation happening in the overall stock market growth story. A growing economy translates into higher stock market valuation and hence the long-term prospects of the stock markets remain upbeat in line with these growth projections. The Indian stock market is also considered among the most well-regulated in the world.
Improved Standard of Living: We are increasingly seeing the trend of reverse brain drain happening in India. With opportunities abound and the start-up ecosystem coming of age, a lot of global Indians are moving back to capitalise on this trend. The improved living standard with infrastructure upgrades is adding to India becoming an attractive destination for NRIs to own assets here.
Depreciation of the Indian Rupee: The weakening of the Indian Rupee against major global currencies offers NRIs a favourable exchange rate advantage. This depreciation makes investing in Indian assets, including real estate and equities more advantageous for NRIs earning in foreign currency.
Content Source: economictimes.indiatimes.com