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Role of diaspora in Economic development

Diaspora means “to scatter” in Greek, but today we use the term to describe a community of people who live outside their shared country of origin or ancestry but maintain active connections with it. The Indian Diaspora is a generic term to describe the people who migrated from territories that are currently within the borders of the Republic of India. It also refers to their descendants. The Diaspora is currently estimated to number over twenty million. composed of "NRIs" (Indian citizens not residing in India) and "PIOs" (Persons of Indian Origin who have acquired the citizenship of some other country). The Diaspora covers practically every part of the world.According to UN, Indians make up the largest diaspora: over 20 million Indians are scattered across the world.

The Pravasi Bhartiya Divas, 2017 was organized on the theme of ‘redefining engagement with overseas Indians’ emphasized the importance of Indian diaspora in business, investments and capacity building success of Swachh Bharat Mission, Digital India, and Start-up India. This highlights the role of diaspora in socio-economic development of India.

Diaspora activities that impact Socio- Economic Development

Remittances - The principal focus with respect to the economic effects of Diaspora on the country of origin has been on their substantial financial contributions through remittances – private transfers from migrants to their families. According to the World Bank remittances can (i) reduce recipient household poverty, with spill over to other households; (ii) increase investment in education and health as well other productive activities; (iii) reduce child labour; and (iv) increase entrepreneurship.

Investment -Beyond remittances, Diasporas contribute to the economic development of their country of origin through Foreign Direct Investment (FDI) and transnational entrepreneurship, including support for entrepreneurs, start-ups and small businesses in the country of origin. They may be more likely to invest in economics that others would consider high-risk, simply because they have better knowledge and relationship opportunities that other investors lack. Diaspora investments may be guided not only by profit motives but also by long run considerations of establishing a base in the countries of their origin. They are likely to be better informed on the capabilities and requirements of domestic labour and the sort of training local labour requires. Third, quite often the factors which influenced the Diaspora to migrate from their homelands may influence the extent of their involvement and contribution to the development of their countries of origin.

Diasporas’ Knowledge Transfer - The constructive contributions of Diasporas to development in their country of origin are transfer of acquired knowledge. These Diasporas are a great source of transfer of technical knowledge and skills in the form of ‘brain gain’. Where knowledge exchange is concerned, Diaspora members can act as important interlocutors between the technology and country of origin. They can contribute these through not only permanent repatriation but also through short- term return.

Diaspora Philanthropy - One of the most important ways that Diaspora contributes to their countries of origin is through philanthropic engagement in many areas. Philanthropy has a pivotal role to play in advancing global equity.

Diaspora Advocacy - Diaspora organisations (and sometimes even individuals) are seen to be getting increasingly vocal and influential in their countries of origin and of settlement. They increasingly seek to influence government, media, corporate sector and other prominent groups and are therefore speaking up on a range of issues affecting their homeland.

Increase demand for Indian goods abroad – Diaspora has catalyzed the demand of Indian goods in their countries of settlement. The goods range from food, fashion to Indian entertainment industry. This has increased Indian export especially of handloom and handicraft sector.

Steps taken by Indian Government to harness benefits of Indian Diaspora

India is one of the pioneers in recognising the importance of its overseas population and establishing an institutional framework for sustainable and mutually beneficial engagement with its Diaspora. India recognises the need therefore, to bring a strategic dimension to its engagement with its overseas community. It is attempting to forge a partnership that will best serve India as a rapidly growing knowledge economy – to drive innovation and entrepreneurship - and meet the aspirations of the overseas Indian community as a significant constituency across the world.

  • The Overseas Indian Facilitation Centre (OIFC), a not for profit trust in partnership with the Confederation of Indian Industry (CII), to serve as a one stop shop for economic engagement, investment and business.
  • The India Development Foundation (IDF), a not for profit trust to serve as a credible single window to facilitate Diaspora philanthropy and lead overseas Indian philanthropic capital into India’s social development effort.
  • The India Centre for Migration (ICM), a not-for-profit society to serve as a strategic ‘think-tank’ on matters relating to overseas employment markets for Indians and Overseas Indian workers.
  • The Global Indian Network of Knowledge (Global-INK), a robust electronic platform that will facilitate transfer of knowledge with the objective of leveraging the expertise, skills and experience of overseas Indians.
  • The Prime Minister’s Global Advisory Council, to serve as a high level body to draw upon the talent of the best overseas Indian minds wherever they might reside.
  • The Pravasi Bhartiya Divas (PBD) - The Pravasi Bharatiya Divas convention is organized every year since January, 2003, with a view to connecting India to its vast Indian Diaspora and bring their knowledge, expertise and skills on a common platform.

                          Strategic Dashboard of Indian Policy for Diaspora Engagement

Sl. No.

Diaspora Engagement

Status of Indian Policy


Flexible Citizenship Laws and Residency and Visa Requirements

India does not permit Dual citizenship however its OCI Card scheme provides for life-time visa free travel and full residency and employment rights for Persons of Indian origin who are citizens of other countries.


Political Rights

Voting rights have not been accorded to Persons of Indian origin who are citizens of other countries, however Non Resident Indians (NRIs - Indian Passport holders settled overseas) have been recently restored their right to vote by amending rules for registration of voters located overseas.


Special Property Rights

Indian Diaspora holding PIO or OCI cards have the right to purchase property in India (except farm and plantation).


Tax Incentives

Reduced customs duty regime for transfer of residence of Overseas Indians returning back to India are available including the retention of NRI status upto three years after return. Provisions for transfer of funds for philanthropy and tax exemption for the same are available.


Portable Benefits

Through the provision of SSAs (Social Security Agreements) pensionary benefits of Indian workers and professionals working overseas are both portable and can be totalised in countries where SSAs have been executed.


General Laws

To promote investments from Indian Diaspora, several provisions have been put in place ranging from special incentives for Bank deposits, investments in the Share Market, and certain special provisions for OCIs and NRIs for Foreign Direct Investment. Also, to encourage employment of overseas Indians, amendments to rules for doctors, scientists, academics and accountants have been or are in the process of being amended.