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1 Introduction

For centuries, the Gulf regionFootnote 1 was a major point on the sea routes between the Fertile CrescentFootnote 2 and India, a centre for the international pearl trade and at various times an entrepot for regional trade between the Crescent and the old Silk Road. Indian presence in the Gulf region predates that period as far as the third millennium BC, when trade and travel flourished between the erstwhile Indian kingdoms and the Arab world. Archaeological evidence from the great Indus Valley civilization period confirms the movement of peoples between the regions. The historical legacies of international trade between the two regions points to barter exchanges of textiles and spices for dates, pearls and semiprecious stones. Importantly, during this period, the Indian business community, especially wealthy individual merchants, set up their base in the region. The major thrust came after the discovery of oil in the region and the consequent economic development of the desert economies, propelling imports of goods, services and manpower from the neighbouring Asian region. As huge chunks of people from India migrated to the Gulf in their quest for wealth and prosperity, so did the business communities in their effort to serve these expatriate consumers as well as the wealthy import-dependent Arabs. The succeeding periods witnessed phenomenal labour migration from the heavily populated subcontinent as the oil-fuelled development process in the Gulf gathered momentum. Simultaneously, individual business houses from the subcontinent started to expand their base by entering into partnerships with Gulf business communities. And the legacy continued, although the pattern of economic engagement has transformed considerably over the years. In essence, the Indian community has played a pivotal role in the transformation of the Gulf economic scenario from primeval commercial exchanges to high-tech-based corporate practices and innovative consumer services.

Against such a backdrop, the major objective of this chapter is to explore Oman-India migration dynamics and to map the socio-cultural and economic interaction between the Omani and Indian migrants from the pre-oil era to recent times. This chapter thereby touches upon the factors by which migration influences the process of regionalisation. The remaining part of the chapter consists of four sections: Sect. 7.2 gives a brief historical account of the evolution of Indian migration to Oman primarily facilitated through commercial exchanges and Indian business communities’ settlement. Section 7.3 deals with the current trends and patterns of Indian migration to Oman, starting from the oil era and moving to the post-oil era. Section 7.4 describes the level and pattern of engagement between Omani and Indian migrants and their perceptions of each other and the prevailing policy paradigm. The last section summarizes and concludes the chapter.Footnote 3

2 Evolution and History: Indian Merchants in Oman

Oman’s tryst with India probably began very early in the commercial history of the Indian Ocean when maritime trade was conducted between Sumer and the Harappan civilization of the Indus valley (Allen and Calvin 1981; Thapar 1975). Some archaeologists believe that Magan, the source of copper for this ancient trade, was located somewhere in Oman, and this argument is supported by the numerous ancient copper-mining sites that have been discovered in the Hajar Mountains behind Sohar. While it is probably safe to assume that Indian merchants called on the coastal ports of Oman, it is impossible to determine when the first Indian merchant decided to establish a semi-permanent presence in Muscat or anywhere else on the Batina coast. However, evidence points to Indian settlement occurring no later than the fifteenth century. S. B. Miles reported the ruins of a Hindu temple at Qalhat (Miles 1966, as cited by Allen and Calvin 1981), the principal Omani port of the fifteenth century. The argument for fifteenth-century settlement is supported further by de Albuquerque’s report that Hindu merchants from Gujarat escaped from Khor Fakkan, a secondary port on the Shimiliya coast of northern Oman, before he sacked that town in 1507 (Walter de Gray Birch 1875, as cited by Allen and Calvin 1981).

Moreover, the period of Portuguese domination of the Indian Ocean reveals extensive information on Indian commercial activities in Oman and Muscat. It is reported that the Portuguese relied heavily on Indian Hindus in their attempts to secure a monopoly of the Indian Ocean/Arabian Gulf trade (Pearson 1973). In the seventeenth century, when the Portuguese lost Hormuz, Muscat became the headquarters of their Arabian Gulf operation and played an important role in their commercial policy.

During this period, Oman’s most important trading destination was the Indian city of Thattha, located on the Indus River in Sindh province of present Pakistan. Thattha was an important trade centre between the Indian Ocean and Central Asia before the Portuguese sack of the city in the sixteenth century. During the period of Portuguese control of its trade, Thattha continued to be an active commercial centre, boasting 40,000 weavers of calico and loongees and artisans of every other class and 20,000 bankers, money changers, shopkeepers and sellers of grain (Allen and Calvin 1981). Thattha’s main export items were cloth, including elegantly embroidered cashmere shawls, silk and cotton yarn, as well as opium, ghee, indigo and sugar. Thattha’s commerce in these goods with Africa and the Gulf was so voluminous that the British believed that the Portuguese position in Muscat was entirely dependent on the customs duties they collected as a result of their policy of forcing all Africa- and Gulf-bound shipping to call at Muscat for licensing (Allen and Calvin 1981).

Hindu merchants were the primary facilitators of the robust trade between Muscat and Thattha by means of Portuguese ships and established warehouses and trading establishments at Muscat. As Allen and Calvin (1981: 36) has described, “Oral traditions of the Indian merchant community in Muscat allege that these Sindhis were the first ‘Baniyas’ to settle in Muscat and they were Bhattias (Bhattiya).”Footnote 4 Under the patronage of the Portuguese rulers of Muscat, the Sindhi Bhattiyas not only expanded their business pursuits, but also increasingly became active politically. As reported by Omani chroniclers Ibn Ruzayq and Al-Salimi, “a Baniya worshipper of the cow, named Narottam, acted as supply agent for the Portuguese garrison at Muscat, and the Portuguese commander seems to have accepted advice freely from his agent. However, the Baniya eventually became dissatisfied with the Portuguese, especially as the commander wished to marry his daughter, and helped the Ya‘ariba rulers of Oman expel the Europeans from Muscat in 1650….” (Peterson 2004: 69).

Nevertheless, the strategic alliance with the Ya‘ariba rulers fetched rich dividends to the Baniyas, as the community was exempted from paying the poll tax (jizya) and permission was granted for the construction of Hindu temple. It is noteworthy that the Sindhi Bhattiyas founded their temple in Muscat with the idol of the deity Govindraj transported from Basra, where Hindus were having problems. Moreover, as a mark of their obeisance to the Omani rulers and to demonstrate their strong ties to their adopted homeland, the Bhattias put an Omani dagger in their vestments.

Importantly, the civil war in the 1740s, which saw the establishment of the Al Bu Sa‘id dynasty, did not affect the Hindu business community adversely and in fact the community continued to prosper and pursue their religious activities prominently under the patronage of the ruler Ahmad Bu Sa‘id (1743–1782). This period also witnessed the establishment of three more Hindu temples. This is substantiated by the description of the Baniya community by Danish explorer Carsten Niebuhr during his fortnight visit to Muscat in January 1765. He remarked,

In no other Mahomedan city are the Banians so numerous as in Maskat; their number in this city amounts to no fewer than twelve hundred. They are permitted to live agreeably to their own laws, to bring their wives hither, to set up idols in their chambers, and to burn their dead (Allen and Calvin 1981: 42).

The Dutch merchant Engelbert Kaempfer, visiting Muscat in 1688, also acknowledged the presence of Hindu Baniyas, as did the Italian physician Vincenzo Maurizi in the early nineteenth century, who put the number of Indian merchants at 4,000. The Indian Navy officer J.R. Wellsted, visiting Muscat in the 1830s, estimated the number of Baniyas in Muscat to be 1,500; he said they nearly monopolized the pearl trade in the Arabian Gulf and were prominent in the supply of grain from India and Indian cloth and piece-goods (Wellsted 1837). Thus by all accounts, it is certain that the Hindu community of Muscat and Oman, which consisted largely of principal merchants, dominated commercial life and had replaced the Al Bu Sa‘id rulers of the town as the paramount economic power in Oman (Allen and Calvin 1981; Wellsted 1837).

Despite the initial success of the Sindhi Bhattias, the community faced severe adversities and ultimate demise during the period 1785 and 1820. This resulted in a massive exodus of Sindhis from Muscat. As outlined by Allen, three interrelated factors were the primary cause for this, namely; the economic collapse of Thattah, the shift in the commercial practices and policies of the rulers of Muscat, and the arrival of Kutchi BhattiasFootnote 5 in Muscat, which is relevant to the analytical scope of this chapter.

The growth of Kutchi Bhattiya’s settlements and rapid domination of Muscat’s commercial landscape is owed to the peculiar geographical location of Kutch and to the Kutchi ruler Godji II (1760–78), who was extremely active in the development of Mandvi’sFootnote 6 shipbuilding industry and also who is credited for Kutch’s commercial expansion in the Arabian Gulf in the late eighteenth century. The Kutchis had every advantage over the Sindhis; as noted by Allen and Calvin (1981: 46),

they were not in competition with the sayyids of Muscat as the Kutchis served largely as shippers rather than middle-men. Kutchi merchants transported the few products of Kutch, predominantly cotton yarn and piece goods, as well as goods from Bombay and the Gujarati ports, to Muscat where they could be sold to the sayyid or his agents. By contrast, the Sindhis had their business establishments in Muscat, and while they could have sold to the sayyid, Sindhi overheads and, consequently, prices were higher. A second Kutchi advantage was that they had a market for a wide range of the products that Muscat had to offer due to their secure trading network in India.

Soon, Kutchi Bhattiyas replaced Sindhi Bhattiyas and increased their commercial profile in Muscat to the point that they overwhelmingly dominated the commercial and economic affairs of the port after the ruler Sayyid Sa‘id transferred his residence to Zanzibar after 1830. Even during Said’s residence in Muscat, though the Kutchis did not establish an extended presence in the port, they established temporary commercial establishments in Muscat and few Kutchi Bhattiyas rose to prominence in the services of the entrepreneurial ruler. In this regard, the cases of two prominent Indian migrant Kutchi Bhattiyas are worth mentioning. One of them is the family business of Virji Purshottam Toprani, who still owns business establishments in Oman and whose contact with Oman is seven generations old and goes back to the days of his family patriarch Aranji Toprani, who sailed to Muscat from Mandvi in the late eighteenth century. The other illustrious example is that of the Gopal Mawji Bhimani family, whose grandfather was the first family member to trade in Muscat in the late eighteenth century. It has also been contended that Gopal Bhimani, apart from extending his business ventures, was also active in Muscat’s politics: “Gopal was among the Baniyas who encouraged Sa‘id ibn Sultan to conquer Zanzibar, and his business manager was active in the suppression of piracy” (Allen and Calvin 1981: 43). By 1840, the Kutchi Bhattiyas filled the commercial vacuum in Muscat, and the community population rose to 20,045 and became the principal economic power in Muscat. Even the death of Sa‘id ibn Sultan in 1856 and the consequent rule of his son Thuwayni ibn Sa‘id (1856–68) was never detrimental to the business interests of the Kutchis. As Thuwayni carried out his father’s policy of abandoning lucrative trade in favour of gaining greater political influence and control in Oman, the Kutchis had to face no state competition. As a result, their business empire flourished while that of the rulers floundered in the succeeding period.

However, the major blow came to the otherwise bright economic future of the Kutchis with the internal political rumblings in Oman that saw the revivalist Ibadi movement spearheaded by Imam ‘Azzan ibn Qays changing the overall power equation. The new conservative government led by Imam ‘Azzan not only removed the Bhattias from their important financial posts, but also sought to extend Ibadi social regulations, including a ban on the use of tobacco and the playing of musical instruments and the imposition of dress requirements, to all the inhabitants of Muscat. Despite Imam Azzan’s assurances of religious tolerance, there were numerous attacks on Baniyas due to their religious practices and ceremonies using bells, gongs and drums, which were perceived as being antithetical to the culture of the rulers. Consequently, the Indians began an exodus from Muscat, and the community dwindled to a mere 750 by 1870 (Allen and Calvin 1981).

Despite the exodus of families from Muscat and Oman, a number of prominent business family still survived there and also grew in importance during the moderate regime of Turki ibn Sa‘id (1871–88), which saw the emergence of a whole new group of young Kutchi Bhattias as the commercial leaders of Muscat. Prominent among them was Sheth Ratansi Purshottam Purecha, who came to dominate the trade and finances of the port after 1871. Ratansi played an important role in this expanded trade, as a leading arms merchant dealing with the London firm Schwarte and Hammer and the Hamburg arms dealer Moritz Magnus and active in exporting dates to the United States through the New York firm of William Hills. Upon this base, a number of other Banians established prosperous businesses that have continued to flourish in Muscat. These include Khimji Ramdas, Dayal Purshottam, Danji Murarji, Vallabdas Umarsi and Gopalji Walji.

There were also two other small communities of Indian origin, traditionally living together in the Kumbhar quarter of Matrah, just outside the town’s walls. The name of the quarter apparently derived from the Indian caste of Kumbhars, traditionally potters in India, although the Kumbhar quarter in Matrah was well known for bread-baking. The quarter was also inhabited by Sonabara, apparently originating from the Indian caste of Sonis who were gold- and silversmiths. The Sonabara continue to specialize as goldsmiths, and in recent times many have taken the name al-Sayigh (Arabic for jeweller) as their family name. Although both communities appear to be Hindu in origin, they are Muslim today (Peterson 2004).

Another important group of Indians lived within the domains of the sultan, the Khwajas (Khojas). Very little is known about the Khwaja community of Oman, which goes by the name Lutti, and virtually nothing has been written about it. The Luwatiyya claim origins in Hyderabad, Sindh and are therefore occasionally given the nickname Hyderabadi.Footnote 7 The pattern of Lutti settlement in Oman was very similar to that of the Kutchi Bhattias. The earliest Luttis came in the wake of the establishment of the Al Bu Sa‘id state in Muscat in 1785. The disruptions of ‘Azzan ibn Qays’ reign may have had the same impact on the Lutti commercial community as it had on the Bhattias. Following the re-establishment of moderate Al Bu Sa‘id rule in 1871, a new group of Luwatiyya came to Oman and came to dominate the community. The Luwatiyya operated within the same kind of mercantile system that the Baniyas utilized, and there were Khwajas in most of the Gulf ports, Bombay, Karachi, Zanzibar and Mombasa. Besides dealing in the standard products, like textiles, grain and dates, the Khwajas also had a virtual monopoly of the trade in dried fish from Muscat, as this was a product in which the Hindu merchants, for religious reasons, would not deal. Khwajas were also involved in various skilled crafts, like carpentry and boat building. Unlike the Baniyas, the Luwatiyya chose to make Matrah their home, and the community was concentrated in a cluster known as Sur Luwatiyya, adjoining the market. The Sur was off limits to non-Luwatiyya and was strictly residential. Despite their permanent settlement in Matrah, the Luwatiyya remained segregated from their Arab neighbours. Although Lutti men would occasionally take Omani women for brides, Lutti women always married within the community. Khwajki, a mixture of Sindhi and Kutchi, was the principal language spoken within the household, but Arabic was fairly widely used. The community had an elected Shaykh and council of elders that governed communal affairs. Worship took place in a Jama‘at khana located within the walls of the Sur.

It is important to note that despite economic competition, the Baniyas of Muscat retained a fairly high degree of community solidarity. The community was represented in political matters by the nagar seth or mukhia, the most respected man in the community. During the later nineteenth century, a Bhimani held this office.Footnote 8 The Hindus celebrated their religious festivals, such as New Year (Diwali), with social gatherings and dinner parties. Usually a dish of the best food would be taken to the Sultan. Baniyas were also invited to the palace on special occasions, although they would not eat the food prepared by the ruler’s non-Hindu cooks. For the most part, dietary laws were kept, and the community maintained a herd of cows to ensure a steady supply of dairy products. Kutchi or Gujarati remained the principal language spoken within the community, although most did learn Arabic for business purposes, and accounts were kept in Gujarati. Indian dress styles were maintained.

In general, the Muscat Hindus made no attempt to assimilate, whereas the Khojas and Baluchis were made Omani citizens – diluted Omanis, as they came to be called in later years. Moreover, in modern times, the Khojas or Lawatiyya have played only a limited role in politics, largely because of their concentration on commerce and because many other Omanis sometimes regard them as “foreigners”. As outlined,

by virtue of education, worldview, and experience, Lawatiyya undoubtedly should have been well represented in Oman’s early cabinets of the 1970s and 1980s. But, although Lawatis are widespread throughout the government at most levels, Lawatis became ministers only in the 1990s, when a son of Hajji ‘Ali Sultan, Maqbul, was appointed Minister of Commerce and Industry in 1993 and Muhammad Musa al-Yusuf received the new portfolio of Minister of State for Development Affairs in 1994 (although he had enjoyed ministerial rank as Secretary-General since 1989). Reflective of the community’s relatively liberal outlook, Oman’s first female under-secretary, Rajihah ‘Abd al-Amir, and first female ambassador, Khadijah Hasan al-Lawati, were Lawati women. Still, perceptions of the Lawatiyah by other Omanis may be negatively impacted by the wealth of successful Lawati merchant families, the corruption of a few prominent Lawatis, and sectarian differences (Peterson 2004: 28).

Thus, over the course of the nineteenth century, Indian merchants came to dominate the economic life of Muscat, replacing the Al Bu Sa‘id rulers as the principal merchants of the city and acquiring fortunes that had once gone to the royal family. An important contribution of the Indian merchant group of the late nineteenth century was its “internationalization” of the trade of Muscat. That is to say that trade expanded beyond the confines of the Indian Ocean basin. The Indian merchants showed great adaptability in this area. European steamers were rapidly replacing Arab and Indian sailing ships, and the Indian merchants were able to import new products from Europe and America for their traditional markets and to export traditional goods to new markets overseas.

3 Indian Migration During the Oil and Post-oil Era

Before 1970, Oman was an isolated country despite its vibrant trading links and the presence of British and Indians in the supply chain. The Sultan prohibited Omanis from leaving the country without his permission and forbade them to wear Western clothes, though many defied and slipped out to live in exile. Movement within the country and in the capital itself was strictly restricted. The gates to the walled town of Muscat were closed 3 h before sunset. Apprehensive of a possible coup by other Arabs, the Sultan encouraged Indian merchants to build their homes and business establishments in the vicinity of the palace. The Sultan also recruited soldiers from Baluchistan for his armed forces and continuously sought advice from the Government of India. It was reported that a number of Indian officials were deputed to the police and the public works departments in Oman (Weiner 1982).

However, oil development in 1967 and the change of government in 1970Footnote 9 witnessed radical changes in the modernization of Oman with the process of economic development gaining momentum. Oil revenues were invested in the development of physical infrastructure including roads, ports, highways and office buildings and also in the development of industries such as fishing, refrigeration and processing, cement, petrochemicals, oil refining, a glass factory, steel rolling mills, copper plants etc. Since educated Omanis had already left the country and settled in neighbouring Gulf countries where they had good, well-paying jobs and since the educational system was underdeveloped, the demand for foreign labour increased with the pace and scale of economic development. In the early 1970s, an influx of migrant workers began, mainly from India and Pakistan. According to the Oman Labour department, by 1975, there were 70,000 foreign workers in Oman as against 99,000 nationals in the labour force. It is also reported that nearly 38,000 Omanis were employed overseas at that time (Weiner 1982). Since many of the Omanis are traditionally engaged in agriculture and fishing, it is quite obvious that the urban labour force consisted overwhelmingly of foreigners. As a result, Omani society became the most culturally heterogeneous in the Gulf region, with a diverse mix of its local Ibadi Muslim population, a Baluchi community, an African population made up of descendants of former slaves, Shi‘is from Iran, two Sunni Arab tribal groups in the province of Dhofar, Arabs who returned from Zanzibar where they formed the ruling class, Hyderabadi and Kutchi merchants from Pakistan and India and skilled and semi-skilled workers from India and Pakistan.

In 1979, the Indian Embassy estimated that there were about 60,000 Indians in Oman. The majority were from Kerala and the remainder from Goa, Gujarat and the Punjab. At that time one Indian was technical adviser to the Sultan with managerial responsibilities for his private properties. The Sultan’s palace itself was built by an Indian construction company that had its office in Oman till the 1990s. Indians were also employed in the government sector, especially in police service. During this period, the Indian business community was also active in Oman. The Sultan made a few exceptions in favour of a handful of Indian businessmen, who enjoyed the privilege of permission to own their own business without any local partner, which was rare at that time in the region.

It is a fact that the Indian merchants and migrants were structurally entrenched within the local economy and there were a strong nexus and mutually vested interests that facilitated the continuous flow of Indian migrants to Oman. In this regard, it is apt to highlight a case of a labour dispute involving Indian construction workers and a Cypriot-owned construction company in Oman (Weiner 1982). Under Omani law, an employer had to provide a minimum wage of 3.6 riyals daily, plus accommodation and food to the workers. However, this large construction company paid the Indians only 2 riyals, provided them with tents rather than wooden barracks for accommodation, had inadequate medical facilities, paid steamship rather than air transport to India and also concluded annual contracts instead of the mandatory 3-year contract. As a result, there was large-scale discontent among the workers. Despite warnings from government authorities, the company managed to call in the police and deported some of the workers to India. Other workers protested with the Indian mission, which informed the Omani government. The workers finally retreated when Omani police arrested 2,000 workers and deported 200 workers with Indian government intervention. There was a backlash in India and the Government of India (GoI) halted the emigration of all workers to Oman in February 1978. The Omani government, under pressure from business houses, requested that India lift the ban. In the state of Kerala, there was also a clamour to end it. Finally, in July 1978, the GoI lifted the ban, but refused to allow the workers to emigrate for employment with the offending company. Nevertheless, Oman remained an attractive destination for Indian workers (especially unskilled workers) in comparison with other Gulf countries, even though the workers get lower salaries in Oman than their counterparts in other Gulf states. In recent years, the number of unskilled workers migrating from India to Oman has increased, despite the current undergoing Omanisation policies in the labour market (see Table 7.1).

Table 7.1 Unskilled Indian emigrants to the Gulf and world
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Currently, nearly 4.6 million Indians live in the GCC countries, making them the largest expatriate community (Fig. 7.1).Footnote 10 The majority of the Indian population in the GCC is from the southern Indian States, including Andhra Pradesh, Tamil Nadu and Kerala. The rest come from Gujarat, Maharashtra, Goa, Punjab, Uttar Pradesh, Bihar and Rajasthan. The Indian expatriate community can be categorized into four broad groups, viz., (a) unskilled workers, employed in construction companies, municipalities, agricultural farms and as domestic workers; (b) skilled and semi-skilled workers; (c) professionals, such as doctors, engineers, accountants, employed in government and the private sector; and (d) businessmen.

Fig. 7.1
figure 00071

Indian migrants in the GCC (Source: Indian Embassies in the GCC 2009)

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There are around 0.6 million IndiansFootnote 11 in Oman, constituting the largest expatriate community in the country. In 2008, Indians constituted 59 % of total expatriate workers in the Omani private sector and 39 % of all expatriate workers in the Omani government sector (see Tables 7.2 and 7.3). Coming from all parts of India, they include skilled workers and technicians, as well as professionals such as doctors, engineers, bankers, finance experts, managers etc., many holding middle and senior management positions in the corporate sector. Several Indians also hold responsible positions in Omani government departments and public undertakings: there are around 2,000 Indian doctors working in the country. The contribution of Indians to the development of Oman, particularly in the fields of commerce, healthcare, education, horticulture, finance, construction and communication is widely acknowledged. A number of Persons of Indian Origin (PIOs) have been granted Omani nationality, some of them receiving high awards of the Omani government. Mr. Kanaksi Khimji and Mr. P Mohammed Ali, both prominent members of the Indian community in Oman, received the Pravasi Bharatiya Samman Puraskar, the highest award conferred on overseas Indians, in January 2003 and January 2004 respectively. There are 15 Indian schools in the Sultanate. All schools follow the CBSE (Central Board of Secondary Education) pattern.

Table 7.2 Expatriates in the Omani private sector by nationality
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Table 7.3 Expatriate civil service employees in Oman Ministries and Government Organizations by nationality
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4 Omani Nationals and Indian Expatriates: The Level and Pattern of Engagement

As already described comprehensively above, in the pre-oil era, relations between the locals and Indian expatriates were purely economic, although sometimes political and largely mutually beneficial, and were very close due to the prevailing conditions in the Sultanate. The situation changed in the early part of the oil era with the new government and the large-scale migration of Indian skilled and semi-skilled workers. In the absence of any concrete evidence, it can be contended that the semi-skilled and skilled Indians always maintained good relations with the local Omanis in the economic domain and maintained their exclusivity. In 1974, the Sultan gave land to the Indian community to enable it to build a social centre. There were also number of Indian schools, Christian churches, several Hindu temples and gurudwara for the Sikh community. As rightly observed,

Social life in Oman remains highly segmented. The Indian middle class has some social contract with English speaking other expatriates, but almost no social contract with the native Omanis (Weiner 1982: 72).

However, with changes in the economic dynamics and labour sector in Oman, the interaction between the locals and Indian expatriates has transformed considerably in the last decade. Before analysing the current phase of engagement, it is apt to delineate a contextual background of and a theoretical perspective for the issue.

4.1 Reliance on Foreign Labour: A Growing Concern and Dilemma

Over the last two decades, the growth in the number of foreign workers consistently outpaced the growth of the national workforce in Oman and other GCC countries. Unlike the oil era, when potential job creation through the expansion of public sector employment temporarily enhanced welfare by acting as a semi-automatic stabilizer, it soon became apparent that such a policy could not be sustained forever. For one thing, such a policy resulted in a misallocation of resources by diverting potential investment funds into public consumption (UNESCWA 2004). Second, with falling oil prices and consequently subdued growth accompanied by mounting fiscal pressures in the 1990s, the public sector was no longer in a position to create adequate jobs to absorb the new entrants into the labour market. Ultimately, this led to a rise in national unemployment rates. Though concrete data on employment is still difficult to source and collate, a few observations can be made from currently available information (Winckler 2002). The unemployment rate among nationals was 11.9 % in Oman (as per the December 1993 population census), 15 % in the UAE (1995), 15 % in Bahrain (1997), 20 % in Kuwait (1997) and 12 % in Saudi Arabia (1997).

This current phase can be characterized as the “open unemployment of nationals” (Girgis 2000). The main factor behind this phenomenon is the preference of nationals to work in the public sector, mainly due to the substantial wage differentials with the private sector. This implies that the private sector in Oman, as in other GCC countries, relied fully on the cheap expatriate labour and the government could not impose the employment of nationals on the private sector for fear of harming their ability to retain competitive prices for their products (Table 7.4). As rightly observed,

Table 7.4 Growth of real GDP, Population and Labour Force in Oman and the GCC (1996–2007)
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In the Gulf countries, segmented labour markets with differential wages for nationals and non-nationals contributed to the high unemployment rate. In the private sector, employers preferred to hire expatriate labour (mostly male), since nationals were generally unwilling to work at the same wage levels as non-nationals. On the other hand, the public sector has been responsible for the absorption of nationals, particularly in the employment of women. The sluggish economic growth of 1.2 percent and the rapid population growth of 3.4 percent during the period 1980–2000 reduced the governmental capacity to expand public-sector job opportunities, which led to the rising problem of unemployment of nationals in a number of countries (UNESCWA 1995: 8).

The paradox is that while nationals put heavy pressure on the labour market, especially in the public sector, the steady expansion of the private sector induced increases in low-cost expatriate labour.

The current unemployment situation in Oman and the Gulf region has serious implications. Although this phenomenon has been in existence for more than a decade, and despite high economic growth rates due to historically high oil prices and an increasing diversified economic structure especially in the first decade since the year 2000, anecdotal evidence continues to show glaring unemployment trends among nationals – with a high in the 15–30 % range in Saudi Arabia,Footnote 12 10–15 % range in Oman, 14 % in UAE,Footnote 13 7 % in Qatar, 4.5 % in Kuwait and 4 % in Bahrain. The nature of unemployment among Gulf nationals is a cause of serious concern that foretells the daunting challenge ahead in the quest for economic diversification. Unemployment in the GCC is both structural – since the demand for and the supply of labour do not match in the face of changes in the structure of the economy (Girgis 2000)Footnote 14 – and cyclical – owing to fluctuating oil prices and corresponding government spending. More importantly, the recent unemployment rates of the more educated are high, partly because of significant increases in the level of schooling and partly because the quality and type of education do not match labour market needs.Footnote 15 It has been argued that “to some degree unemployment among the educated can be attributed to ‘queuing’, that is graduates waiting for prospective employment in the government sector – this is more prevalent in the Gulf Cooperation Council economies” (UNESCWA 2004: 9).

While Oman, like its GCC neighbours, has modernized rapidly and the material aspects of its way of life have been transformed beyond recognition, the traditional and conservative socio-cultural and political aspects have been only marginally touched upon by the forces of the oil-fuelled modernization process. The character of the rapidly changing Omani society continues to be enmeshed in the transitional phase between modernity and post-modernity. While Oman has integrated considerably with the global economy, there are also more frequent and recent debates about the “limits to growth” and “growth at what cost”, or “bridging the divide between quantitative growth and qualitative progress” – reflecting Omanis’ increasing concern to retain their peculiar social and cultural traits that are tied to tradition and religion. In this particular paradigm, the presence of a huge foreign labour force of diverse national ethnic composition adds to the emerging fluidity.

The overall framework to analyse the economic and socio-cultural anxieties of nationals about the presence of large numbers of expatriates in Oman can thus be designated a problem of a “dilemma between retrospective culture and futuristic economy”. In Oman, like other Gulf regions, there is clear distinction between the socio-cultural space and the economic space. Since the culture of a community is determined over a period of time and the contemporary culture is embedded in the social pattern, it is a retrospectively determined phenomenon. In contrast, the economic requirements of the development process determine the trends and patterns of labour migration to Oman and the Gulf region, rendering them futuristic. Thus from a broader perspective, contemporary Gulf society is in a state of “identity crisis” in which nationals are increasingly feeling isolated and are therefore apprehensive about everything considered foreign, including foreign labour. The ruling elites, meanwhile, strive to protect their peculiar culture and religious tradition without countering their global economic competitiveness. In this way, the Gulf presents a best case of global–local debate impinging upon various facets of national identities in the throes of globalization, which has crucial bearing on the future socio-cultural space of an increasingly economically interdependent society.

The above shows a number of different phenomena that have over time crystallized and become issues of debate within GCC political and intellectual circles. The following discusses key concerns raised by the Gulf national population about labour migration and Oman’s continued reliance on large-scale imports of workers.

4.2 Anxieties About Economic Opportunity

For the moment, national unemployment is basically voluntary in Oman, as in the other GCC states. Given the vastness of economic opportunities and the continued ability of the state to provide public sector employment, the situation of significant unemployment has not yet translated into immediate and visible social consequences. Yet, as the Omani economy has begun to diversify and as the state’s dependence on low hydrocarbon revenues lead to financial stringency, meaning both that employment in the public sector is increasingly unavailable and also that other sectors of society, such as women, are becoming an increasing force on the employment market, these social consequences can no longer be denied. What exists is a situation in which the educated youth’s private sector employment opportunities are both limited and not very encouraging. It also needs to be mentioned that expatriates do not eat away into public sector opportunities for nationals in general. Nevertheless, the continued reliance on foreign workers has resulted in fewer incentives for nationals to pursue education and training, as there is a large degree of complacency that these foreign workers will be available to fill needed positions. This is a key dilemma for the government to consider, as it has concentrated on pouring large sums of money into the education and training of nationals. While this is a good step, the jury remains out on its overall effectiveness and one should be very cautious about thinking that it is only a matter of time until a skilled national labour force appears that is ready to turn the demographic imbalance around.

Another economic consequence is that there are also fiscal and income redistribution effects in the host country to contend with. This is a primary cause of anxieties among Omanis and other Gulf nationals, because foreigners – who feel uncertain because their status in the host countries is purely temporary – remit huge sums of money to their home countries. Table 7.5 describes the trends of remittance outflows from Oman and the Gulf region.

Table 7.5 Remittances outflowsa from the Gulf region and world, 2008 (USD million)
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4.3 Socio-Cultural Anxieties

Currently, the Omani society is going through a phase of tremendous socio-cultural transformation precipitated by large-scale urbanization and increasing concern about national identity. Adding to the perplexity is the presence of a large-scale foreign labour force and its impact on the socio-cultural space. The issue of immigration and identity now appear at the top of the national security agenda. By determining or changing the basic demographic structure, questions of nationality go to the heart of Oman’s basic character or identity. Simultaneously, it is obvious that the large influx or stock of migrants continues to maintain its cultural, linguistic and religious traditions. It is also unrealistic to think that nationals will exhibit a cavalier disregard for the preservation of the culture they share; they can be expected to desire immigration policies that nurture and protect their culture. Thus, immigration triggers these deep responses because it forces a people to address the question: who are we and who do we want to be (Meilaender 2001)?

This fear of being swamped by a large presence of foreigners from diverse cultural backgrounds is also rooted in the process of nation building with its emphasis on cultural homogeneity. Moreover, this perception has been heightened in recent years by the regional integration process’ implications for the national identity and sovereignty of the member states of the GCC.

Importantly, among the various expatriate communities, Indians maintain strong bonds with the religion and culture of their countries of origin and do not wish to abandon their linguistic, religious and cultural practices.Footnote 16 In this respect, it is widely perceived that migration threatens communal identity and culture by directly altering the ethnic, cultural, religious and linguistic composition of the population, as political institutions cannot adequately accommodate even relatively small numbers without significant changes that raise sensitive issues of national identity. The local national population increasingly demands action from the government to address the demographic imbalances and to protect the spaces that allow nationals to feel protected and able to promote their own cultural values. A certain fortress mentality has been erected in which nationals feel besieged and powerless to stop the continued inflow of foreigners. In this context, not only a process of demographic imbalance needs to be addressed, but also the more likely process of a demographic blending in which the lines of identity between nationals and expatriates are becoming increasingly blurred. One example here is the well-known phenomenon of bilingualism and cultural mix resulting when Gulf children are reared by foreign nannies (mostly Asians). One UAE official has stated that, due to its dependence on foreign workers,

This society is recreating generations of dependent personalities who request that domestics do everything for them. Our full reliance on domestics in the household is encouraging the growth of an unproductive family (Sabban 2002: 27).

Therefore, the ethnically homogenous society of the Gulf places higher value on preserving its ethnic character and regards the foreign population as a threat to stability and security.

Thus, it can be argued that the negative images of the expatriates have been reinforced by certain economic, social, political and ideological factors. Firstly, traditionally, the prevailing collective image of Gulf societies is that of an ethnically homogenous, closed society that proscribes any kind of uncertainty. This image combined with the lack of any kind of discussion about multiculturalism rendered it difficult to entertain any notion of acceptance of the other. Secondly, practices of differential treatment for similar migrants from different countries can lead to discontent and protests. For example, the criteria of higher pay for Westerners in comparison with other nationals reinforces the segmentation and can create frustration. Thirdly, geographical proximity to India has instilled in immigrants a sense of being temporary residents having short-lasting proximity with the Omani society; this weakens any bid for social integration by the immigrants themselves. Lastly, even with a law facilitating selective naturalization, the authorities feel that those ethnic or religious communities that have a higher fertility than the native communities may challenge the long-established model of national identity.

The bottom line of the above argumentation is that the large-size foreign labour force and the private sector’s continued reliance on it are increasingly seen as pressing security issues that must be comprehensively dealt with. Kapiszewski (2001) was one of the first to point to the emerging security concerns as a result of the preponderance of foreigners. In this regard, it is worthwhile to highlight that the recent spate of labour strikes and violence in labour camps in Bahrain, Kuwait and the UAE also adds to the Omani authorities’ apprehension of social instability.

4.4 Policy Response and Outcome

Currently, the issue of foreign labour is more than an economic issue in Oman and other Gulf countries, with authorities viewing the issue as a national security threat with socio-political implications. This is being compounded by the international call for equal rights for the foreign labourers, and the authorities have adopted a “zero-tolerance” approach aimed at resorting to expatriates in the absence of any local or regional alternatives (Janardhan 2007). To illustrate how the issue of foreign labour has increasingly become a public issue of concern, it is useful to summarize the migration policy views of the GCC member countries as in Table 7.6.

Table 7.6 Immigration policy views of the Gulf countries
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What is clearly apparent is that while authorities tended to be comfortable with the immigration policies in place in the mid-1970s, this is no longer the case, as the issue of foreign labour reliance emerged at the top of the policy debate. In response to this changed perception, Oman and GCC authorities are putting in place several measures to redefine the labour market rules, including nationalization of the workforce and heavily regulating expatriates flows by means of stringent administrative rules and regulations. As the value of Omani oil revenues decreases, unemployment increases and nationals become more willing to accept occupations dominated until now by expatriates, jobs in many sectors are no longer open to expatriates in Oman.

Setting employment quotas has been the main direct policy plank of the GCC countries. The rationale behind the quota system is to place the burden of identifying, training and maintaining local personnel on the employers, who are often foreign companies. However, these policies have not been successful yet, due to the rigid labour market and the growing economic pressure that constantly demands foreign labour in the face of local skill shortage. In principle, Oman, like other Gulf countries, is concerned with its reliance on foreign labour and the looming threat of increased local unemployment. In practice, most of these countries are more concerned with maintaining the momentum of economic growth and are reluctant to risk their competitiveness by raising the cost of foreign labour. As rightly remarked by Shaham (2008: 9),

this policy is really an extension of the old labor regime, trying to assure the rotation of the foreign labor force. It is unlikely to increase the employment of locals, it does not apply to the increasing number of skilled workers, and by mandating rotation it will further reduce the price of labor. Why pursue a policy so adverse to the proclaimed goal of increasing local employment? The rhetoric behind this proposal suggests that its primary goal is to abate social and political concerns.

5 Summary and Conclusions

Since the pre-oil era, as traders, entrepreneurs, moneylenders, bankers, customs farmers, financiers of the pearl trade etc., Indian migrants have developed into a critical mass in Omani economy and society. With their astute skills and close commercial relations with the rulers, they have tremendously contributed to Oman’s economic modernization. Over the course of the nineteenth century, Indian merchants came to dominate the economic life of Muscat, replacing the Al Bu Sa‘id rulers as the principal merchants of the city and acquiring fortunes that had once gone to the royal family. Indian merchants not only took control of trade and fiscal administration, but also expanded Muscat’s commercial prominence by broadening the mercantile base of the port through trade with Europe and America. The integration of migrant Indians in Omani society further strengthened with the discovery of oil and the mass immigration of skilled as well as unskilled Indian labourers. It is difficult to imagine the contemporary Oman economic scene without taking into account the role played by Indian manpower. For Indian migrants, the security and working environment have been assured by the close association between the Indian community and the ruling regime in Oman, although there is stark asymmetry between the migrants and the native population.

Things may change with increasing apprehension about foreign labour because of glaring unemployment among Omani nationals and the increase in the number of nationals willing to work in sectors in which they previously refused to work. There can be no doubt that the flows of people and commodities have converged to contribute to the development of a multicultural society in conformity with many local sources of authority and social legitimization. Yet, the presence of a huge foreign labour force is a pervasive issue with considerable implications for Oman’s economic and socio-cultural fabric and its political and international relations. The labour polemics and polarized viewpoints about the foreign labour issue point towards a situation of uncertainty that is contrary to the character of traditional society. While economic pressures have resulted in the growth of the foreign labour force and a quota on migration, perceived socio-cultural anxieties create a policy dilemma on how to manage governance. Oman, like other Gulf countries, is thus in a catch-22 situation. Simultaneously, relations between the expatriates and the nationals continue to be mutually suspicious, which is not conducive to a stable social structure in the future. It can be contended that how the Omani government and politically articulate groups within Omani society feel about Indian expatriates will largely decide the fate of this diaspora in the future.

Seen from a broader perspective, Indian migration to Oman at various times points to a confluence of various economic, political, social and cultural interactions, resulting in a process of “virtual” interregionalisation. This is a peculiar form of regionalisation where – in the absence of any formal institutional mechanisms – economic imperatives and mutual benefits have been the primary driver igniting and sustaining the process of interregionalisation based on labour migration in the case of India-Oman integration. The most important feature of this form of regionalisation is the diversity of interests (political, social and cultural) among actors (migrant Indians and local Omanis) that hinders full-scale integration and the convergence of purely economic benefits that glue them together. Moreover, in terms of regionalisation process, Indian migration to Oman has evolved a “critical mass” or “comfort zone” that has the potential to enable interregionalism. The “critical mass” or “comfort zone” refers to certain push and pull factors that drive and sustain migration from India to Oman. From the perspective of interregionalism, the critical mass is not confined to India and Oman only, but spreads across the Indian subcontinent and the Gulf region.