India’s Ministry of External Affairs describes the roughly 10 million Indians in the GCC (Ministry of External Affairs 2026) as a “living bridge” between India and the Gulf (Ministry of External Affairs 2025). This article argues that the diaspora is a stratified network whose tiers are unequally visible in official data and that a middle tier of small-scale investors is effectively invisible. Alongside an elite tier with institutional access and a worker tier visible through remittances, the diaspora’s economic contribution includes what this article terms “unmeasured capital”: informal, individual-level investment by non-resident Indians (NRIs) in small enterprises, such as a shop, restaurant or family business. Although the law permits this investment, published FDI and remittance statistics do not identify it as such: much of it already sits within remittance totals, recorded as transfers rather than investment.

Two visible tiers

Entrepreneurs do not arrive in the Gulf with access to political and economic decision-makers. They acquire it gradually, as capital, scale and reputation raise their standing in local commercial and diplomatic circles (Quadri 2024). Low-wage workers rarely gain comparable access. Exposed to unpaid wages, medical emergencies and legal disputes, and lacking integrated access to formal grievance or diplomatic channels, they rely on informal community organisations to mediate for them (Burmeister-Rudolph 2024). Two forms of facilitation therefore operate in parallel, one directed at state and commercial institutions, the other at worker welfare outside formal state channels. A single “bridge” narrative obscures this division and the distinct engagement each tier requires.

Three tiers in the data

The same stratification appears in the economic data, but the figures usually cited in aggregate must first be separated. The largest flows between India and the Gulf are not diaspora flows at all. GCC-India bilateral trade reached USD 178.56 billion in FY 2024-25, and UAE-India trade alone reached USD 101.25 billion in FY 2025-26 (Embassy of India, Riyadh 2026; Embassy of India, Abu Dhabi 2026). This trade consists overwhelmingly of crude oil, LNG and gold moving between states and corporations. Cumulative GCC investment in India likewise exceeded USD 31 billion by September 2025 (Embassy of India, Riyadh 2026). It comes predominantly from sovereign wealth funds such as ADIA, QIA and Mubadala, which are instruments of Gulf states rather than of the Indians who live there. These are state-to-state and corporate relationships, and they reveal little about the diaspora itself.

Set these aside, and three diaspora channels remain, one for each tier.

The elite tier: formal investment. The elite tier appears through Gulf-based, NRI-founded firms reinvesting in India at scale. LuLu Group reported over ₹20,000 crore invested in Indian malls, hotels and food processing by 2023 (Business Standard 2023). Aster DM Healthcare, which began as a single Dubai clinic in 1987, now runs 19 hospitals across five Indian states (Aster DM Healthcare 2025). This capital enters through the same FDI route as sovereign investment under FEMA’s Non-Debt Instruments Rules (Ministry of Finance 2019). Because it flows through Gulf-registered entities, however, it is recorded alongside sovereign and conglomerate investment, with no sub-category attributing it to the diaspora. Even the elite tier is only partly visible: its capital is counted, but not as diaspora capital.

The worker tier: remittances. The worker tier is visible mainly through remittances. GCC countries supplied roughly 38 percent of India’s USD 135.4 billion in total inward remittances in FY 2024-25 (Ministry of Finance 2026), or about USD 51 billion. The UAE alone accounted for 19.2 percent of the national total in 2023-24 (Reserve Bank of India 2025), a share already included in the GCC figure. This flow reaches far more households than trade or FDI, yet it receives far less policy attention.

The middle tier: unmeasured capital. The middle tier is visible through neither channel. Its members may also send ordinary remittances, but their investment is a distinct flow: informal investment by non-resident Indians in small enterprises back home, such as a shop, restaurant or family business. This flow is not absent from the data but misclassified within it. The money may be sent through banking channels as “family maintenance and savings,” or it may be withdrawn locally from a Non-Resident External (NRE) or Non-Resident Ordinary (NRO) account. Either way, it is counted within inward remittance totals, since RBI’s measure covers both routes (Reserve Bank of India 2025), and it is recorded as a transfer, not as an investment. Nor does it register as FDI, because the business structures most small NRI investors use fall outside the FDI route entirely, as the next section explains. No published statistic identifies this flow for what it is, which is why this article calls it “unmeasured capital”: present in the data, but unrecognisable within it.

Survey evidence suggests this tier is real, even though official data cannot isolate it. The Kerala Migration Survey 2023 found that 15.8 percent of remittances to migrant households went towards renovating houses or shops, a category that itself merges domestic and business spending (International Institute of Migration and Development 2024).

Why the middle tier goes unrecognised

FEMA’s Non-Debt Instruments Rules permit FDI only into companies and Limited Liability Partnerships (LLPs), excluding proprietorships and partnership firms, structures many small NRI-backed businesses still use (Reserve Bank of India 2019). One Person Companies no longer belong on this exclusion list: since the Companies (Incorporation) Second Amendment Rules, 2021, NRIs may incorporate OPCs, which are registered as private limited companies and so fall inside, not outside, the FDI-eligible category. The gap, then, is twofold: businesses still run as proprietorships or partnerships, and investment is made on a non-repatriation basis, which FEMA treats as domestic rather than foreign investment regardless of the entity type (Ministry of Finance 2019). Capital that falls outside the FDI route sits largely inside remittance data, but as transfers for family maintenance or local withdrawals from NRI deposits, not as investment (Reserve Bank of India 2025). This capital falls between two reporting systems, and its size is unknown.

This matters because policy follows what gets measured. Recording this investment separately would reveal the middle tier directly and let India design instruments for it, such as targeted investment facilitation or dedicated financial products. Left unrecorded, this tier stays invisible, and diaspora policy continues to be built around the two extremes the data already shows.

Way forward 

RBI purpose codes already apply to money entering NRE and NRO accounts, so no new infrastructure is needed, only a specific code for productive investment, since the existing “family maintenance and savings” catch-all does not separate invested money from spending money. But a code at the point of inward transfer catches only funds sent directly for that purpose. It misses funds that enter under one declared purpose and are only later moved, domestically, into a business or current account, a transfer that attracts no FEMA cross-border reporting and so leaves no trace at all. 

Authorised Dealer banks should therefore also offer an optional purpose declaration for such local transfers above a given threshold. Both declarations must be explicitly statistical and carry no compliance consequence, since remitters investing in proprietorships or partnerships, a route FEMA already permits on a non-repatriation basis, might otherwise default to “family maintenance” out of fear that declaring investment intent invites scrutiny. Neither measure requires new legislation or changes reported totals, but together they would make this category visible in published data for the first time, feeding directly into diaspora investment facilitation and targeted financial products so that recording the flows leads to real support rather than a statistical exercise.

The diaspora’s strategic value lies less in its size than in whether its tiers can be seen. A simple remittance tag would show how much capital currently goes unrecorded as investment and, in doing so, would bring into view the middle tier that both the “living bridge” metaphor and existing data overlook.

References:

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Mukund T is an Associate, Research – International Relations at the Centre for Public Policy Research (CPPR), Kochi. 

Views expressed by the authors are personal and need not reflect or represent the views of the Centre for Public Policy Research (CPPR).

Mukund T

Associate, Research – International Relations at CPPR | [email protected] | + postsBio

Mukund T is an Associate, Research – International Relations at the Centre for Public Policy Research (CPPR), Kochi. He holds a postgraduate degree in International Relations from CHRIST (Deemed to be University), Bengaluru, and a bachelor's degree in English, Political Science, and History from the same institution.

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