Key Points
joblessness
- Gulf remittances and labour-intensive exports face the brunt of the Iran war
- More than 9 million Indians working in Gulf economies face growing uncertainty
- Manufacturing hubs of leather, garments and glassware are reporting weaker demand
- Over a million Indians, already, returned from the region in March and April
ISLAMABAD: India’s employment engine is coming under renewed strain as the Iran war disrupts remittances from Gulf economies and weakens demand for labour-intensive exports, exposing fresh vulnerabilities in the already strained Indian job market.
The conflict in the Middle East has begun squeezing two traditional pillars of Indian employment: overseas Gulf labour and export-oriented manufacturing.
The country was already struggling to generate sufficient non-farm jobs for millions entering the workforce each year.
Recruiters and industry representatives say hiring momentum has slowed sharply since the escalation of hostilities between Iran and the US.
Gulf employers are also delaying recruitment, and businesses inside India are becoming increasingly cautious about expansion plans.
Out of nearly 19 million Indians working overseas, around 9 million are employed in Gulf countries.
Remittances from the region are a critical support mechanism for household consumption and local economies across several Indian states, particularly Kerala.
Indian officials told media about 1.1 million Indians, including workers and travellers, returned from the region between the start of hostilities on February 28 and the end of April, reflecting growing disruption across Gulf labour markets.
The pressure is also spreading across manufacturing centres tied to exports.
Businesses in sectors such as leather goods, footwear, garments and glassware say rising shipping uncertainty, weaker external demand and higher input costs are forcing companies to delay hiring and reduce operating capacity.
Kanpur, one of India’s major leather-export hubs, has emerged as a visible stress point. Industry representatives say factories are operating below capacity.
The risks extend beyond exports and remittances.
Economists warn that weaker Gulf growth, tightening migration channels and rising automation pressures are converging at a difficult moment for India’s labour market.
Youth unemployment and underemployment in India remain a persistent concern despite the headline economic growth.
India’s unemployment rate rose to 5.2 per cent in April from 4.9 per cent in February, with urban youth joblessness remaining significantly higher at nearly 14 per cent, according to economists and labour market experts.
Analysts say prolonged instability in the Gulf could further weaken remittance inflows, reduce wage growth and increase pressure on India’s domestic labour market.
Above all, returning migrant workers struggle to find comparable employment opportunities at home, with hardly any chance.
