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Overseas India expands as Domestic India slows

14 August 2013

With the slow pace of reform hurting the domestic economy, India’s growing overseas community is becoming increasingly influential across the world. Christopher Barrow of the Metropolitan Safe Custody group reflects upon the history of Indian migration and the growing economic strengths of major offshore centres of Indian population.

India has the second largest diaspora in the world, estimated to be a community of about 27 million people compared with a little over 50 million overseas Chinese. Broadly speaking (because data is notoriously unreliable), overseas Indians are broken down between approximately 16 million Persons of Indian Origin (PIOs) and 11 million Overseas Citizens of India (OCIs) & Non-Resident Indians (NRIs). In simplistic terms, NRIs are citizens of India who are temporarily non-resident for tax purposes, whereas PIOs & OCIs are citizens of another country, but who enjoy certain rights and privileges in India. Another distinction is that PIOs are those who migrated to other countries before 1935, whereas OCIs and NRIs represent migrants from 1950 onwards.

Outside of the Indian Sub-Continent, the largest overseas Indian populations are spread across the Middle East (5.8 million), Asia Pacific (4.6 million), North America (4.2 million), Africa (2.2 million), Western Europe (2.1 million) and the Caribbean (1.3 million). Within those regions, as the table below reveals, offshore Indian communities are largely concentrated in relatively few countries. If you exclude the large numbers of ethnic Indians in Nepal, Myanmar and Bangladesh, just 15 countries account for nearly 70% of all overseas Indians.

Overseas Indians (PIOs, OCIs & NRIs) by Country
(excluding Nepal, Myanmar & Bangladesh)
	Top 15 Countries	Number	% x Global Total
1	US	3,183,063	11.98
2	Malaysia	2,050,000	7.72
3	Saudi Arabia	1,789,000	6.73
4	UAE	1,750,000	6.59
5	Sri Lanka	1,601,600	6.03
6	UK	1,500,000	5.65
7	South Africa	1,218,000	4.58
8	Canada	1,000,000	3.76
9	Mauritius	882,220	3.32
10	Oman	718,642	2.70
11	Singapore	670,000	2.52
12	Kuwait	579,390	2.18
13	Trinidad & Tobago	551,000	2.07
14	Qatar	500,000	1.88
15	Australia	448,430	1.69
GLOBAL TOTAL (43 Countries)		26,568,512	69.41

Major waves of Indian migration took place during the 19th century and early 20th century. Indentured workers were sent to colonial sugar plantations in Mauritius, Guyana, Trinidad, Jamaica, Fiji and East Africa. Substantial numbers of Indians (mainly Tamil) migrated to colonial Malaysia & Singapore to work as plantation labourers, administrators, policemen, soldiers and traders. During the past 100 years, large numbers of Gujarati, Sindhi & Punjabi merchants and traders have settled in the Middle East (mainly Dubai, Oman & Bahrain), South Africa and East Africa. After independence from Britain in the 1960s, many Indians who had settled in Kenya, Uganda and Tanzania moved to Britain and North America. The 1970s oil boom resulted in large-scale emigration to the Gulf countries. The internet boom in the late 1990s and early 2000s accounted for the largest wave of immigration by Indians (mainly Marwaris, Gujaratis, Telugu & Tamil) into the USA. Today, over 200,000 Indian students study abroad, mainly in North America and Europe.

In contrast to earlier groups of Indians who entered foreign countries as labourers, taxi drivers, farmers and shopkeepers, the later arrivals have often come as professionals and business people or, having completed tertiary education, moved into the professions. In the US, huge numbers have been highly successful in information technology, medicine and academia. In the UK, the Indian emigrant community is well-entrenched (often third generation) and have achieved great success in business, law and medicine. In the Middle East, substantial numbers of NRIs, mainly from South India (Kerala, Tamil Nadu, Andhra Pradesh & Karnata) work not only as labourers and clerical assistants, but increasingly as engineers, doctors, lawyers and accountants.

Overseas Indians in Metropolitan Areas
(cities with over 200,000 PIOs, OCIs & NRIs)
	Top 10 Financial Centres	Number	% x Global Total
1	Dubai	1,585,951	5.97
2	Durban	950,000	3.58
3	Singapore	670,000	2.52
4	New York City	592,888	2.23
5	Toronto	572,250	2.15
6	London	539,491	2.03
7	Qatar	500,000	1.88
8	Kuala Lumpur	385,000	1.45
9	Los Angeles	341,000	1.28
10	Vancouver	217,820	0.82
GLOBAL TOTAL (43 Countries)		26,568,512	23.88

Most Indians today choose to emigrate to urban centres. An increasing number will run small businesses or pursue a professional career. As the table above shows, nearly a quarter of the world’s 27 million overseas Indians live in just 10 cities. Overseas Indians constitute a significant proportion of the population of these metropolitan areas – over 50% in Dubai, nearly 30% in Durban and approximately 10% in Singapore, Toronto and Vancouver. New York is home to the largest Asian Indian population in the Western Hemisphere (2.4% of NYC’s population) and London’s Indian community is the city’s largest non-white ethnic minority group (6.4% of the population).

This week’s Economist has an interesting article entitled “Made outside India”, which discusses the issue of whether domestic economic activity is “drifting offshore”. India’s economic growth rate has slowed alarmingly; the government is facing a growing budget deficit; and the rupee continues to weaken. Furthermore, frustrated business people continue to complain about India’s inefficient bureaucracy, public-sector corruption and inadequate infrastructure. Two of the biggest beneficiaries in recent years have been Dubai and Singapore. Dubai offers a world-class logistical base, substantial tax advantages and an increasingly sophisticated financial sector. The UAE’s cheap energy, together with an efficient planning regime, has started to attract some large Indian manufacturers to the Gulf. Singapore is possibly the largest hub for Indian trade, mainly as a result of its excellent international finance, legal, technology and logistics capabilities.

Just as Indian labourers and traders spread across the world during colonial times, the subsequent waves of educated, entrepreneurial migrants will continue to benefit the likes of London, New York, Dubai and Singapore. As India tightens the rules on buying gold (to protect its balance of payments), the idea of an overseas move must look especially appealing right now!