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Labour mobility has the potential to transform India’s demographic advantage into diplomatic leverage—if backed by skill recognition, gender-inclusive policies, and portable social security.
India currently has over 600 million people below the age of 25, which has long been celebrated as a global benefit, as it represents the economic phenomenon of a demographic dividend—a window of opportunity where the working-age population significantly outnumbers dependents. Yet the real test lies in transforming this potential into strategic diplomatic capital. This requires India not just to be content with the title of a “labour exporter” but also to negotiate forward-looking and flexible labour mobility frameworks that recognise Indian skills and protect Indian workers’ rights abroad.
India’s demographic dividend is expected to peak by the early 2040s, after which it will have to cope with the challenge of an ageing population.
India’s demographic dividend is expected to peak by the early 2040s, after which it will have to cope with the challenge of an ageing population. The current demographic advantage, however, has transformed from a domestic policy consideration into a powerful tool of economic diplomacy, fundamentally reshaping how India engages with partner nations through labour mobility frameworks.
With economic and geopolitical stressors such as the COVID-19 pandemic, conflicts in the Middle East & Ukraine, and rising levels of sovereign debt, we have seen developed nations adopt an inward-oriented stance on migration, which has put emigrants from developing nations in a difficult position. The rise of leaders like Donald Trump and Giorgia Meloni, along with their populist politics in North America and Europe, respectively, has led to more restrictive immigration policies.
These restrictions continue to withstand public scrutiny even though the developed world comprises ageing economies that would benefit from skilled migration, when viewed from a purely economic standpoint. These migrants form a workforce that can be deployed in critical sectors, such as construction, elderly & palliative care, hospitality, and STEM sectors, yielding positive economic outcomes for the host economy.
Historical precedent suggests that gradual efforts have been made to capitalise on this potential: India has transitioned from being a passive labour exporter to pursuing active diplomatic engagement in this regard. The foundation of this strategic shift was laid in 2008 with the establishment of India’s Centre for Migration as an autonomous think tank linked to the Ministry of External Affairs, tasked with advising on all matters related to global mobility.
In 2009, India and Denmark signed an MOU on labour mobility partnership, aiming to facilitate the movement of skilled workers between the two countries. This agreement, signed on September 29, 2009, established a framework for cooperation in areas like labour market expansion, employment facilitation, and orderly migration. However, the effectiveness of the MOU was constrained by Denmark’s evolving labour market policies, the absence of qualification recognition frameworks, and the lack of social security portability. While the MOU set an important precedent, it remains largely symbolic, with real mobility still limited to a narrow band of highly skilled workers.
In recent years, India’s FTA negotiations with multiple nations have aimed to address core issues, including the lack of social security portability and related concerns such as qualification recognition. The India-UK FTA, concluded in 2025, has a key provision exempting Indian workers temporarily posted in the UK from paying the UK’s social security contributions for up to three years, which represents a projected saving of ₹4,000 crore annually for Indian firms, illustrating the concrete economic benefits of labour mobility diplomacy.
Along similar lines is the MATES programme established under the Australia-India Mobility and Migration Partnership of 2023, which offers 3,000 annual places for Indian graduates and early-career professionals to work in Australia for up to two years. The programme establishes structured pathways that address the strategic interests of both countries. Australia gains access to skilled professionals in areas of shortage, while India's workforce acquires global exposure and generates significant remittance inflows.
The absence of standardised recognition for Indian professional qualifications in key destination countries often relegates highly skilled migrants to roles that do not reflect their expertise.
Notable migration and mobility partnership agreements with France and Germany, signed in 2021 and 2022 respectively, contain features like extended residency permits for students, increased quotas for job seeker visas, liberalised short-stay multiple entry visas, streamlined readmission procedures, and exchange programmes for young professionals, portraying the growing prominence of labour mobility in India’s international negotiations.
Despite the positive mobility prospects of India’s workforce, there are structural challenges that require the attention of policymakers and trade negotiators. It has been observed that the recognition of Indian skills remains a persistent challenge, as Indian qualifications are often undervalued in Western markets despite demonstrating competencies. This leads to potential underemployment of Indian workers. This bottleneck necessitates the establishment of mutual Recognition of Prior Learning (RPL) arrangements when negotiating trade deals at the bilateral level, and building consensus on the need for standardised qualification recognition regimes at the multilateral level.
The absence of standardised recognition for Indian professional qualifications in key destination countries often relegates highly skilled migrants to roles that do not reflect their expertise, resulting in persistent underemployment and inefficient allocation of talent. For instance, Indian engineers in Germany or nurses in Australia routinely encounter protracted equivalency assessments and bridging requirements, which delay or restrict their entry into the formal workforce.
Secondly, social security portability is another metric that needs to be addressed to maximise the diplomatic value of Indian labour. Social security portability refers to the ability of migrant workers to preserve, maintain, and transfer their social security benefits, such as pensions, healthcare, and unemployment insurance, when moving across borders for employment. The absence of effective portability mechanisms sometimes leads Indian migrant workers to forfeit contributions made to foreign social security systems if they return home or relocate to a third country, resulting in significant financial and welfare losses.
From a gendered lens, currently India’s demographic dividend remains significantly underutilised. Current migration patterns show a significant gender gap, with male migrants comprising a disproportionate share of international mobility. Addressing this imbalance through targeted skilling and mobility programmes for women could unlock new diplomatic opportunities while positioning India as a progressive force in global labour discussions.
The benefits accrued from India’s labour mobility strategy are multifaceted in nature. Beyond simple economic benefits in the form of remittance inflows, India’s strategy serves as an anchor for technology transfers, knowledge sharing, and global value chain (GVC) integration.
For instance, Indian professionals in Silicon Valley and other technological hubs create knowledge spillovers that benefit both host and home economies through cross-border entrepreneurial ventures and research collaborations. This positions labour mobility as a “win-win” situation that facilitates two-way technological advancement rather than one-directional skill transfer.
The absence of effective portability mechanisms sometimes leads Indian migrant workers to forfeit contributions made to foreign social security systems if they return home or relocate to a third country, resulting in significant financial and welfare losses.
An apt case study worth emulating in this regard is the Australian Pacific Training Coalition (APTC), which has a ‘home’ track and an ‘away’ track. The ‘away’ track provides language, digital literacy, cultural training, RPL, and other necessary work-abroad training. More importantly, it also has a programme for investing in the return and reintegration of workers through mechanisms which include access to platforms while away, support for their RPL applications, and guidance on the types of work available to them if they choose to return.
India’s labour mobility strategy has a substantial impact on the domestic economy as well. A notable example of this is the “infrastructure for mobility arrangements”, where partner countries invest in the Indian economy in exchange for preferential labour access. These arrangements create a multiplier effect, transforming labour mobility partnerships from a zero-sum affair to a mutually beneficial arrangement that not only strengthens workforce deployment but also spurs infrastructure and capacity building in the home economy.
As global labour markets restructure in response to technological and demographic disruptions, India's ability to position its workforce as a solution to these challenges will determine its strategic relevance in an increasingly competitive global mobility landscape. India must address the dual challenges of non-standardised education and social security portability by negotiating next-generation labour mobility partnerships that mandate automatic social security portability, include gender-inclusive provisions targeting female workforce participation, and establish joint monitoring mechanisms to track real-time employment outcomes and worker protection standards.
A possible solution is the establishment of a National Skills Recognition Authority (NSRA) to standardise mutual recognition agreements and create sector-specific qualification frameworks that align with international standards while streamlining the assessment process for Indian professionals abroad. The current moment represents not just an opportunity but an imperative for India to convert its demographic advantage into lasting diplomatic influence through carefully crafted mobility partnerships.
Akarsh Srivastava is an intern at the Centre for New Economic Diplomacy at the Observer Research Foundation.
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Akarsh Srivastava is an intern at the Centre for New Economic Diplomacy at the Observer Research Foundation. ...
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