KANPUR, May 22 : Escalating tensions in the Middle East are beginning to weigh heavily on India’s employment ecosystem, disrupting overseas job opportunities, weakening export demand and creating uncertainty for millions of workers dependent on Gulf economies.
For decades, employment in Gulf nations and rising international demand for labour-intensive Indian products such as leather goods, garments and handicrafts provided financial stability to millions of families across the country. However, the ongoing Iran conflict has triggered fresh economic stress, leaving returning migrant workers struggling to secure livelihoods back home while export oriented industries battle rising operational costs and declining orders.
Returning Workers Face Income Collapse
Among those affected is 32 year old Mohammad Qureshi from Kanpur, who until recently worked at a jewellery store in Saudi Arabia. Earning nearly Rs 30,000 a month, Qureshi had managed to support his family, contribute towards his sister’s marriage and begin construction of a modest house.
Today, he earns barely enough to survive while assisting at his cousin’s roadside tea stall after uncertainty in the Gulf disrupted his return plans.
“Life abroad was stable and financially secure. Here, opportunities are limited and expenses keep rising,” Qureshi said while serving customers at the crowded stall. He now lives with his mother and elder sister and hopes regional tensions ease soon so migrant workers can resume overseas employment.
His situation reflects a broader challenge emerging across India, where thousands of workers dependent on Gulf jobs now face shrinking opportunities amid slowing regional growth and geopolitical instability.
Manufacturing Hubs Feel Export Pressure
Industrial centres such as Kanpur are also witnessing the fallout of the conflict. Rising fuel prices, higher freight charges and uncertain global demand have significantly affected export linked businesses, especially in the leather sector.
At Kings International, a leather processing factory that exports saddlery products and sports equipment to international brands, operations have slowed sharply over recent months.
Factory owner Taj Alam said soaring logistics and shipping expenses linked to instability around the Strait of Hormuz have eroded profit margins at a time when global buyers are placing fewer orders.
According to Alam, the factory that once processed around 200 hides daily and employed more than 500 workers is currently operating at nearly half its capacity.
“Businesses are avoiding expansion because future demand remains uncertain,” he said, adding that industries connected to overseas markets are becoming increasingly cautious about hiring new workers.
Kanpur contributes nearly one-fourth of India’s annual leather exports valued at approximately $6 billion and supports nearly five lakh jobs directly and indirectly, according to industry representatives.
Mukhtarul Amin, vice chairman of the Council for Leather Exports, said manufacturers are attempting to retain workers despite growing financial pressure but remain hesitant about investments and recruitment.
Gulf Employment Pipeline Weakens
India has nearly 19 million citizens employed overseas, with almost half based in Gulf countries. Economists warn that slower economic growth in the region could weaken labour demand further.
World Bank projections estimate Gulf economies may expand by just 1.3 per cent in 2026 compared to 4.4 per cent the previous year, raising fears of hiring freezes and project cancellations.
Recruitment agencies across north India say overseas placements have slowed considerably since hostilities intensified in the Middle East.
At Hayat Placement Services in Kanpur, recruiter Gautam Bhatnagar described the sudden decline in hiring activity.
“Earlier we placed several candidates every month for Gulf jobs. Now even one or two successful placements are difficult,” he said.
According to recruiters, many employers in the Gulf have delayed fresh hiring while families in India are reluctant to spend heavily on migration expenses amid uncertainty surrounding regional stability.
Kerala Watches Remittance Risks Closely
Concerns are also mounting in Kerala, one of India’s largest recipients of Gulf remittances. The state’s economy has long depended on overseas income flowing from expatriate workers employed across Saudi Arabia, the UAE, Kuwait and other Gulf nations.
Thomas Cherian, a 50-year-old construction worker from Kerala, spent nearly two decades employed in Saudi Arabia before returning home temporarily last year. However, his employer later suspended operations and reportedly laid off hundreds of Indian workers after projects stalled amid regional instability.
Cherian fears his work visa could expire if he fails to return soon.
Officials monitoring overseas migration trends say there has not yet been a mass return of Indian workers, but prolonged conflict could worsen financial stress across Gulf economies and eventually trigger large scale job losses.
Ajith Kolassery, chief executive officer of NORKA Roots, an agency assisting non-resident Keralites, warned that sustained economic disruption in the Middle East could intensify pressure on Kerala’s already fragile employment market.
Remittance Growth May Slow
India received more than $102 billion in remittances during the first nine months of the last financial year, underlining the importance of overseas income to domestic consumption and household savings.
Economists caution that prolonged instability in the Gulf could reduce remittance inflows, affecting spending patterns in several Indian states where overseas earnings support education, healthcare, housing and small businesses.
Analysts believe weaker remittance growth may also hurt local economies dependent on migrant income, especially in regions with limited industrial employment.
Youth Employment Challenge Intensifies
The broader concern for policymakers lies in India’s rapidly expanding workforce. Nearly 400 million Indians fall within the 15-29 age group, making job creation one of the country’s most pressing economic priorities.
Despite strong GDP growth projections, experts say employment quality remains a major concern. Urban unemployment currently stands above six per cent, while joblessness among urban youth remains significantly higher.
Economists warn that slowing exports, weak global trade conditions, automation and changing migration policies are simultaneously reducing opportunities in manufacturing, services and overseas labour markets.
K.E. Raghunathan, national chairman of the Association of Indian Entrepreneurs, said traditional employment channels are narrowing rapidly due to technological disruption and weaker international demand.
“This is not merely a temporary slowdown. Structural changes in global trade and labour demand are reshaping employment patterns,” he observed.
Informal Jobs on the Rise
Labour market experts also fear that slowing wage growth may push more workers into low-paying informal jobs, contractual employment and gig-based work arrangements.
Ram Singh, economist at the Indian Institute of Foreign Trade, said uncertainty in overseas labour markets and export sectors could significantly affect fresh hiring across manufacturing, logistics and trade linked industries.
“The bigger concern is stagnant wage growth and rising dependence on insecure employment structures,” Singh noted. “Many educated young people are already working in jobs that do not match their qualifications.”
As geopolitical tensions continue to disrupt trade routes and investment sentiment, economists believe India may face a prolonged challenge in balancing growth with employment generation.