The decision by Saudi Arabia to abolish its long-standing Kafala sponsorship system marks a significant shift in Gulf labour governance, with particularly important consequences for India given the size and strategic value of its migrant worker population in the Kingdom. The kafala system is a legal framework that has, for decades, defined the relationship between migrant workers and their employers (Kafeel) in the Gulf region. However, in the past decade, the kafala system has come under intense criticism for enabling exploitation due to weak protections for blue-collar workers, eventually leading to low pay, harsh conditions, and widespread discrimination and abuse. Global scrutiny intensified by COVID-19 and Qatar’s 2022 World Cup preparations exposed its deep flaws. Following this criticism, in June 2025, Saudi Arabia announced the abolition of the Kafala system, which affects almost 13 million foreign workers, including almost 2.5 million Indians.
Labour diplomacy is one of the core pillars of India’s engagement with Gulf nations. India has long been the biggest source of expatriate labour in Saudi Arabia, supplying workers across various sectors. With the abolition of the kafala system, Indian labour rights have a chance to improve, reducing historically heavy risks of exploitation. This recalibrates India’s overseas worker protection agenda into a more proactive partnership rather than reactive crisis management. Pragmatically, India’s External Affairs ministry should now shift its focus from repatriation and complaints handling to collaborative frameworks with Saudi Arabia for labour-skills upgradation, remittances efficiency and welfare regimes.
Further, this reform signals that Saudi Arabia is liberalising its labour architecture under its Vision 2030 plans, which aim at transitioning the Kingdom toward higher-skilled work and less dependence on the sponsorship-based migrant model. For India, this offers an opportunity to redefine how its workforce benefits from the Gulf ecosystems. The removal of kafala eliminates the structural constraint on mobility, which can help New Delhi to invest in its diaspora infrastructure and forge new bilateral labour-mobility MoUs.
In strategic-diplomatic terms, as Saudi Arabia enhances the reforms related to labour rights, India stands to benefit from expanded avenues of cooperation. Also, the labour reform softens one of the potential friction points related to worker welfare and remittances between New Delhi and Riyadh, shaping the diaspora politics between the two nations. India thus gains a more stable platform in Saudi Arabia to pursue investments and various other strategic partnerships. Moreover, the reform signals a shift in Saudi Arabia’s calculus wherein labour migration is now linked to economic modernisation rather than just supplying the workforce. India can leverage this by negotiating more sophisticated frameworks, including regional training hubs and joint pathways for Indian professionals moving there.
However, the reform is not devoid of challenges. Ensuring effective implementation remains crucial. Historically, Gulf labour reforms have been announced but weakly enforced, leaving workers vulnerable despite formal modifications. So, India must strengthen its consular outreach, bilateral dispute resolution mechanisms and pre-departure guidance for workers. Moreover, India must be conscious of potential competition from other nations supplying workforce to the Kingdom in order to seek access to Gulf labour markets under these new scenarios, enhancing the need for India to distinguish its migrant workforce through skill, reliability and service orientation. All in all, New Delhi’s policy must therefore adjust by emphasizing value-added roles and diaspora contributions beyond simple workforce numbers.
In conclusion, the abolition of the kafala system in Saudi Arabia presents a transformational moment not only for Gulf labour governance, but for India’s migration strategy, diaspora policy and its engagement with Gulf nations. By treating this as more than a strategic inflection point, India should leverage this opportunity to recalibrate its role from a passive workforce sending country to an active partner in the Gulf’s economic modernisation. The key will lie in converting the formal reform into sustained institutional frameworks, skill partnerships and strategic alignment that benefit the Indian diaspora and the bilateral relationship.
The author is assistant professor, Amity Institute of Defence and Strategic Studies (AIDSS), Amity University, Noida.
