Indians forced to return home as Iran war rocks Gulf economy

Meera Kurian, 46, had worked in Dubai long enough to stop counting the years. Earlier this month, the hotel where she worked let her go. Occupancy had fallen sharply after the outbreak of the Iran war.

She is not angry about it, and that, more than anything, captures the overall mood of returning Indian workers.

"Everyone is in the same situation," Kurian told DW from the port city of Kochi, in southern India.

"You cannot be angry at a war."

Across the Gulf region, the Iran war has triggered airspace closures, shipping disruptions and stalled projects, puncturing the confidence that keeps the region moving.

The city Kurian left behind is holding its breath. Trade that once moved smoothly through the Strait of Hormuz is now slowed and rerouted. Travel has dried up, hotels are emptying and airlines are cutting flights. Even supermarket shelves are thinning.

"When people stop coming, it spreads … retail, logistics, everything. Dubai runs on visitors. Take that away and the whole machine slows down," said Kurian.

Indians evacuated from the Gulf

Kurian is one of some 9 million Indian nationals who, as of earlier this year, held a job in the Gulf nations. Indians make up the largest expat community in the region. They are working in sectors ranging from construction and hospitality to logistics, retail and services  and are sending over $50 billion (€46 billion)in remittances to their home country every year.

Around 984,000 Indian nationals flew home between the outbreak of the Iran war in late February and mid-April, according to India's Ministry of External Affairs, although this number also includes students and other vulnerable groups in addition to migrant workers.

"Our efforts are focused on keeping people safe, with dedicated control rooms issuing updated advisories containing information related to local government guidelines, flight status and travel situations," senior Ministry official Aseem Mahajan told reporters.

Still, most of the Indian workers have so far decided to stay behind, unwilling to abandon jobs and lives built over the years. For them, the calculation is painful and practical. Returning means giving up everything they came for. Staying means living inside an economy that is quietly contracting around them.

It's an uncertain wait with no end in sight. If the war persists, they will face layoffs or be put on unpaid leave. Those who decide to return to India will have to contend with expensive plane tickets and relocation costs amid further risk to their jobs.

Parts of India feeling the impact

Kurian told DW that sending cargo home from Dubai to Kochi cost her 30% more than before. And even though she is now back in her home country, it does not exactly feel like returning home.

"Nobody is saying it out loud, but everyone is waiting," she told DW.

The economic disruption has also followed Kurian all the way to India's state of Kerala. The state is India's largest recipient of remittances, with roughly 2.2 million Keralites working abroad. Nearly 90% are in the Gulf, according to the Kerala Migration Survey.

"Drop in remittances has also begun to impact domestic consumption and companies in places like Kerala who report that their sales have seen a dip, especially in areas dominated by families of Gulf migrants," Venu Rajamony, a former diplomat from Kerala, told DW. 

"All these trends will accelerate the longer the war extends. The trust others had in the Gulf countries as a safe haven has been seriously eroded."

'I cannot start all over again'

Ramesh Kumar Reddy, 38, is out of work. He had spent 11 years as an instrumentation technician at a petrochemical plant outside Muscat, Oman, before being asked to go on unpaid leave in late March with just two weeks' notice.

Back in Visakhapatnam, in the eastern state of Andhra Pradesh, his Gulf certifications in pressure systems, hazardous materials and safety compliance carry little weight. The nearest refinery is not hiring. He has applied to a private security firm.

"In Oman, I was a specialist till the war disrupted everything," Reddy told DW. "Here, nobody knows what to do with me. I cannot start all over again."

It is an early sign of what a prolonged conflict could bring. People returning to India are not just blue-collar workers, but technicians, supervisors and small business owners. For many of them, the exit from the Gulf has been sudden and unforgiving.

Iran war raises risk of 'labor shock' in India

If the conflict continues to drag on, it will start to hit consumption, housing and household debt in India, with effects spreading far beyond the families directly affected.

"A prolonged Iran-linked conflict in West Asia will steadily strain Gulf economies and, in turn, India's diaspora. While there is no sudden exodus yet, a drawn-out war could trigger job losses and push many Indians, especially families, to return," Anil Wadhwa, a former ambassador to Oman, told DW.

"Even over the longer term, the Gulf's role as India's employment 'safety valve' may weaken as conflict and post-war rebuilding reshape opportunities in the region," added Wadhwa.

Lekha Chakraborty, economist at the National Institute of Public Finance and Policy, warns of a "labor shock."

"Within months, a war-driven labor shock could spill into wider regional stress, with rising debt, underemployment and pressure on state finances," she told DW. "At that point, the fallout from the Iran conflict is no longer confined to the Gulf. It begins to weigh on the Indian economy itself."

For most of India, the economic shock of the Iran war is still on the horizon. For Kurian, it is already at the door.

"We had a life there. Now we wait to see what is left of it," she said.

Edited by: Darko Janjevic