The Dhillon family, once employed in a brick kiln in Punjab, witnessed a dramatic turnaround when their son Baljinder emigrated to Canada. Baljinder started as a truck driver in British Columbia, working long hours to save money. Over time, he purchased his own truck, then another, and eventually established a logistics company.
With Baljinder’s consistent financial support, the Dhillons transitioned from poverty to affluence. They invested in farmland, financed a lavish wedding for their daughter, and built a modern villa in the village, complete with amenities unheard of just a decade ago. This is the story of most of the migrants who left the country in search of prosperous opportunities. Thereafter, they become Non-Resident Indians (NRIs) or Overseas Citizens of India (OCI) cardholders contributing to the soft power diplomacy between India and the rest of the world.
To recognise the contributions of the overseas Indian community in the development of India as well as to safeguard their interests, the Government of India has been celebrating the Pravasi Bharatiya Divas on 9th January since 2003.
The day is historically significant as it commemorates Mahatma Gandhi’s arrival in Mumbai from South Africa on January 9, 1915. In this piece, we analyse the role of the overseas community in Indian economic development.
Economic Contributions made by the diaspora
India reached a historic milestone in 2024 by receiving $129.1 billion in remittances, the highest annual inflow ever recorded by any country. As per the World Bank, India accounted for 14.3% of global remittances that year, the largest share for any nation since 2000. In comparison, remittances to India in 2023 were $111 billion.
Source – World Bank
Fig- Remittances outpace other forms of incoming payments
(Source- World Bank)
In June 2024, SEBI allowed NRIs and OCIs to own up to 100% aggregate contribution in the corpus of Foreign Portfolio Investors (FPIs) based in International Financial Services Centres (IFSCs) in India. Previously, their contributions were limited to less than 25% of FPIs’ total assets, with a combined cap of 50%. This change is expected to boost NRI and OCI participation in Indian capital markets.
The 2024-25 Budget introduced measures enhancing NRI and OCI investments, including changes in tax rates and deductions. For instance, the Long-Term Capital Gains (LTCG) exemption limit for listed equity shares and units of equity-oriented mutual funds was increased from ₹1 lakh to ₹1.25 lakh, providing a higher threshold for tax exemptions.
When it comes to start-ups, the abolition of the ‘angel tax’ in July 2024 has further incentivised investments, making it more attractive for NRIs and OCIs to fund early-stage startups.
NRI investments in Indian real estate were over $13 billion in 2023, accounting for approximately 15% of total real estate investments. This share is expected to rise to 20% by 2025, indicating sustained interest from NRIs and OCIs.
Enhancing Global Advocacy through Diaspora
In the United States, Indian-Americans are among the wealthiest and most educated communities, and have risen to leadership positions in business, politics, science, and the arts. Indian-Americans also serve as important bridges between India and the United States. Comparable patterns can be seen within Indian communities across Europe, the Middle East, Asia, Africa, and other regions.
Imagine growing up in Chennai, where the loudest sound you’d hear was the cheerful chatter of a cricket match, and ending up leading a tech empire that shapes how billions
search for the meaning of life (and cat videos). Sundar Pichai, the unassuming boy with a love for engineering, now directs Google’s vast digital universe.
If we go a little eastwards across the Atlantic, Rishi Sunak, the dapper, cricket-loving British PM with a penchant for chai lattes and Indian food classics like samosas, has not only reshaped British politics but also introduced a splash of Indian spice to 10 Downing Street. Creating a network of such prominent members of the Indian diaspora from around the world with counterparts in countries presents a major opportunity in terms of the country’s strategic interests. For instance, there is a sense of acknowledgment that the growing bonhomie between India and Italy has led to the latter’s withdrawal from China’s Belt and Road Initiative (BRI).
Historically also, India has benefitted from the diaspora by lobbying its interests. In 2008, Indian-American groups like the U.S.-India Political Action Committee (USINPAC) played a pivotal role in lobbying for the U.S.-India Civil Nuclear Agreement, which allowed India to access nuclear technology despite not being a signatory to the Non-Proliferation Treaty (NPT). Another instance of diaspora lobbying was the advocacy for fairer visa policies and the resolution of green card backlog issues in the US by groups such as the Hindu American Foundation.
Promoting Technological and Social Development
Now, talking about transnational entrepreneurship; one of the most significant long-term benefits of engaging with an active diaspora is the fillip it provides to the technological sector and socio-economic development. Cities like Bengaluru, Gurugram, and Hyderabad stand as prime examples; vibrant IT hubs that host global giants such as Amazon, Google, Facebook, and Uber. These cities are often referred to as the Silicon Valleys of India, showcasing how diaspora-driven innovation and investment have transformed them into global powerhouses of technology and commerce. This cross-border collaboration has also created millions of jobs and fostered cutting-edge advancements that ripple across industries worldwide.
Diaspora Diplomacy
Again coming to the example of the United States, unable to travel to India to assist in person during the Covid-19 pandemic, Indian-Americans leveraged their influence and financial assets to apply political pressure, mobilise resources and organise local aid. As a result, the Biden administration extended assistance by offering ventilators and vaccines to India and made the unprecedented move of waiving intellectual property protections on vaccine production to increase manufacturing.
Now, let’s analyse what the government has in store for the ‘parvasi’ community.
Schemes Related to Overseas Indians
Some of the schemes like the Pravasi Kaushal Vikas Yojana (PKVY) focus on the skill development for Indian workers settled abroad. The Scholarship Programmes for Diaspora Children (SPDC) invites the children of Persons of Indian Origin (PIO) and NRI children to be eligible for 100 scholarships per year. The Know India Programme (KIP) targets youngsters belonging to Indian Origin between 18-30 years. The Visiting Advanced Joint Research Faculty (VAJRA) was created to formalise a rotation programme in which top NRI scientists, engineers, doctors, managers, and other professionals lend their know-how to Indian government corporations for a limited time period.
These schemes serve as an opportunity for launching new initiatives towards increasing diaspora engagement, including those that would facilitate greater investment and ease work permit regulations.
Some Issues that Crop Up
On the government’s side, managing the impact of foreign funding to create unwanted churns in domestic politics remains a critical issue, as seen in India’s strained relations with Canada over allegations of diaspora-backed separatist movements. Also, the lack of streamlined outreach to smaller diaspora groups, particularly in Africa, Southeast Asia and the Pacific Island Countries (PICs), limits broader engagement. For example, the Kafala System of Qatar gives kafeels complete control over migrant labourers and their legal status in ways that undermine the contractual basis of the system. A major reform is necessitated in this area for the migrant workers. Balancing political advocacy abroad with internal political sensitivities complicates effective diaspora diplomacy. These issues, therefore, highlight the need for more cohesive policies for and robust communication strategies with the sizeable Indian diaspora.
