Saudi police recently arrested more than 200 powerful figures — including 11 princes, four ministers and dozens of former ministers and billionaires — in what authorities termed as an anti-corruption drive. But critics called it an attempt by Crown Prince Mohammed bin Salman (MbS) to grab power as the prince has established his dominance, now controlling the national guard, military and internal security. Separately, the Gulf country’s proxy confrontation with Iran for regional supremacy has unexpectedly heated up, sending oil prices higher and adding to the uncertainty roiling stock markets in the Middle East. All these developments in Saudi Arabia, the second biggest employer of Indians in 2017 after the United Arab Emirates, may not only impact the present political and business equations between Riyadh and New Delhi but will also affect more than three million non-resident Indians living in the Gulf country.
According to the latest emigration clearance data released by the government of India, a total of 32,995 Indian jobseekers, or 18 percent of the total emigration clearance of nearly 1.84 lakh, migrated to the Kingdom between January and June this year. But things are not the same as they were about a decade ago. Falling oil prices are hurting job opportunities in the Gulf country. Lack of new projects and the withdrawal of the proposed ones are leading to layoffs in workforce. Cold war in the region is adding to the woes. Bin Laden Group, one of the biggest construction companies in the Gulf, laid off about 22,000 employees from India earlier this year. Workers at thousands of other big and small Saudi firms are also being rendered jobless.
“The layoffs began in 2015 in the Gulf countries. Besides the oil crisis, the cold war between the Gulf countries is discouraging to new workers from India. Many projects in Qatar have been cancelled and the Government of Saudi Arabia has given the Makkah-Madina Project a break. Restrictions imposed on Qatar by the Gulf Cooperation Council, the looming war clouds between Saudi and Yemen, and the crises in Iraq and Syria are also discouraging new workers, and this is having an impact on the remittances received by India,” Mohammed Ali Shabbir, Leader of Opposition in Telangana Legislative Council and former minister of NRI Affairs in the erstwhile united Andhra Pradesh, recently said.
Over three years, the Kingdom has been aggressively implementing the Nitaqat nationalisation programme, with industries replacing foreign workers with Saudi youths. In April this year, Saudi labour ministry barred foreigners from working in Saudi Arabia’s numerous shopping malls. Wages have come down sharply for expatriates. Like other expats, the revised visa regulations to promote the Saudisation scheme, aimed at adding more local jobs to the economy and addressing the rising problem of unemployment, have badly hit the Indians working or seeking employment in Saudi Arabia.
An astronomical hike in the ‘expatriate dependent fee,’ or family tax, is forcing thousands of Indians working in the Kingdom to send their families back home. Effective from July 1, the Saudi government imposed a new fee on all members of the expatriate families. Accordingly, for each member of the family, an expatriate worker has to pay 1,200 Saudi riyals (roughly 21,000) a year. The tax was just 100 riyals a year for a family. According to the Saudi General Authority for Statistics, there are one crore expatriate workers in the kingdom and 24 lakh dependants, who are now being viewed as a huge burden on the economy. One estimate suggests that each expatriate costs the Saudi government roughly 1,500 riyals a month in terms of subsidies on water, electricity, gas and other essentials. The Gulf country is likely to double the fee next year and by 2020, the family tax will be 4,800 riyals for each dependent member of the expatriate.
“The present developments and policy changes in Saudi Arabia are agnostic. However, as for any other expatriate, Indians are also adjusting to the changing market and regulatory conditions,” said Nisar Ahmed Khan, an Indian working with a Saudi research firm, while highlighting the complete Saudization of the cellphone retail market, the planned 100 per cent localization of general retail sector and reduction in number of expat healthcare professionals, etc. “These will have a direct impact on employment and income of the expats, including Indians.
Such measures, including 5 percent VAT, will force the medium income (SR5000 to SR7500 per month) Indians to send their families back home to avoid paying increased residency fees. In the mid to long run, many expats will leave Saudi Arabia as it would be difficult for them to bear the social cost of being separated from family,” Khan added.
India, which is the third largest consumer of oil in the world, must tread carefully amid latest developments, including the power struggle in Saudi Arabia. Both the countries recently vowed to work on elevating their relationship to a new level as the oil giant Saudi Aramco promised to make big investments in India’s energy sector and more business opportunities are expected to open up for Indian firms in the West Asian nation. “I am convinced that the world’s fastest growing energy consumer and the world’s largest, lowest cost and most reliable oil supplier, must elevate their relationship to a much higher plane,” Saudi Aramco CEO Amin H. Nasser had said at the India Energy Forum held in New Delhi in October.
India’s fast expanding economy, younger population and policy aimed at driving domestic manufacturing are expected to double demand for oil and triple demand for gas by 2040. If these permutations and combinations are highlighted and bargained properly on the table, things may start improving for the three million Indian diaspora in Saudi Arabia and the overall 8 million people of Indian origin who reside and work in the Middle East. After all, they remit close to USD 35 billion every year that makes a substantial contribution to the Indian economy.
The Saudis, who have traditionally supported Pakistan with cash infusions, are now paying heed to India’s rising global stature. The Indian government, on its part, should wait and watch the ongoing transition in Saudi Arabia. Meanwhile, it should make sure that Indians there do not get caught in the crossfire. The safety of their jobs must also be ensured. As the new balance of power starts taking shape, New Delhi must review its foreign policy with focus on improving the condition of Indians working in Saudi Arabia. Till then, we have not much option but to keep our fingers crossed.