Capturing talent: The role of Indian migration in Europe’s economic growth and lessons from Germany’s success

Capturing talent: The role of Indian migration in Europe’s economic growth and lessons from Germany’s success

• Lead Authors: Manisha Barbara Bieber, Dimitrios L. Margellos
• Co-Authors: Avtansh Behal, Patrizia Cogo Morales
• Editor: Dimitrios L. Margellos

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Executive summary

Europe faces critical demographic challenges and skills shortages, particularly in STEM fields, while simultaneously witnessing rising anti-immigration sentiment. This analysis demonstrates how Indian migrants represent a significant economic opportunity, contributing disproportionately to European economies through high earnings, social insurance payments, and filling critical skills gaps. Using Germany as a case study, where Indian workers earn the highest median salary among all nationalities (€5,390), including Germans themselves, and retention rates lead OECD countries, this analysis examines successful talent attraction strategies amidst persistent integration barriers. India’s growing talent pool is increasingly interested in European countries in addition to traditional destinations like the US and the UK, creating a strategic opportunity for the European Union. However, administrative hurdles, language barriers, a paucity of data, and inadequate integration support threaten Europe’s competitiveness in the global talent market. Targeted policy reforms can transform these challenges into economic advantages.

Introduction

India has been increasingly successful in securing access abroad for its citizens. This fact is often lost in the cacophony of calls for more restrictive migration policies – a worrying clamour that stains European politics and fails to adequately distinguish between refugees, asylum seekers, and skilled migrants. India, a country with a surplus of talent and the raw numbers to sustain such migration flows well into the 21st century, has benefited enormously from a promise to “lend” its people to richer countries in exchange for education, employment, ideas, and remittances. German Foreign Minister Annalena Baerbock has called this a “win-win-win [sic]” situation – and rightly so.

In Germany, the current top EU destination for Indians, there were 277,455 Indians in 2024, up from just 48,280 in 2010. Though the long-term growth trend is remarkable and will almost certainly continue in the future (see below), no EU country currently ranks in the top 10 destinations abroad for Indian migrants (the UK would have enjoyed this honour with approx. 1.9 million overseas Indians, were it not for Brexit). In the Netherlands the trend has recently reversed, as the government in power seeks to curtail inflows of immigrants. While France and Germany remain focused and are pushing to ensure they secure the best minds, a fragile political climate risks upending these efforts, even if the far-right fails to clinch power in the coming years. The growing anti-immigrant rhetoric in Europe, varied only in its aggression across the political spectrum, could easily deter potential talent. This would be an error and, perhaps, a death sentence for Europe’s future economic prospects.

Untapped economic potential

Economists often speak of leaving “trillion-dollar bills on the sidewalk” when it comes to restrictive migration policies. In Germany, the median full-time Indian employee earns €5,390, the highest of any nationality, a number skewed in favour of highly-skilled foreign populations. These highly-motivated Indian immigrants are net contributors to their respective Member State economy, despite having to overcome the trials and tribulations of the immigration system and the difficulty of integrating in a new environment. The IW (German Economic Institute) notes in their study that social insurance contributions by Indian migrants have risen by 741.4% between 2012 and the end of 2023, while “of the approximately 94,000 Indians working full-time in Germany, only 7.3 percent are 45 years or older.” Insofar as a silver bullet exists to address western countries’ demographic struggles and their lagging-behind in STEM fields (Science, Technology, Engineering and Mathematics), migration from India comes close to the ideal solution.

More and more Indian students are choosing the EU for higher studies, moving away from traditional centres such as the United States, the United Kingdom, and Canada, as these countries place tight restrictions on migration. This shift in educational preferences represents a significant opportunity for Europe. As of 2024, Germany hosts nearly 43,000 Indian students, with France welcoming close to 9,500 Indian students in 2024, a number expected to swell to 30,000 by 2030.

This openness to Indian migration brings numerous benefits. With 70% of Indians choosing to pursue studies and careers in STEM, leading European universities have moved quickly to offer English-language programs, allowing them to attract talent by breaking-down language barriers and offering more attractive options to potential students. This provides European universities with a useful Anglophone voice in research, at a time when scientific research in particular is seeking refuge away from the United States. The Economist has rightly pointed out that Europe must quickly seize this opportunity and adopt a more open approach with greater funding opportunities to capture the increasingly available talent in the US, and out-compete a burgeoning academic sector in China. German policymakers are apparently already considering how to “poach” such talent, but geopolitical concerns are likely to restrict any sweeping policies for the time being.

Beyond research advantages, there are also considerable financial benefits to this strategy. Indian students also provide a financial lifeline to Europe’s universities, a pragmatic aspect which cannot be ignored at a time when Member States are mulling cuts to public expenditure on education. The Netherlands has already moved ahead with a massive €1.2 billion in higher education cuts. Unlike residents of the European Economic Area, whose tuition fees are calculated on a sliding scale, proportional to their family income, Indian students are uniformly charged at the top of this scale. Such a fee structure is especially true of business schools, which attract hundreds of Indian candidates for MBAs each year.

The investment to fully integrate such candidates may seem prohibitive at first glance, but such an assessment neglects the economic inflow from foreign students – be it on tuition fees, tourism or simply day-to-day expenditure. When considering the substantial earning potential of these graduates and their contribution to Europe’s global competitiveness, the initial integration costs represent a minimal investment that yields exceptional economic returns. Since India’s economy cannot absorb its educated youth, European openness presents a mutually beneficial opportunity. The Indian and European governments must thus continue to pursue policies that seek to attract, retain, and integrate Indian immigrants into the labour market post-graduation, providing the necessary support structure at a time of high economic uncertainty.

However, the current system falls short of this ideal in critical ways. In an ideal world this modest investment in foreign students not only equips the students with skills and knowledge, but also helps them integrate into an economy which they will, in turn, help grow. Still, this is not a given by any means: Droves of Indian immigrants flock to the continent to study, but often have a difficult time utilising their newfound skills to enter a ruthless job market. This is, at best, a failure — or a lack of will — of the host country to understand the process of integration. At worst, it is a willful abandonment of the talent that will shape the future, and is a net economic loss.

For a country like Germany, the barrier to entry is simply too high, and the comparative advantages at times miniscule to justify choosing it over the Gulf — where bureaucracy is practically non-existent — or any Anglo-Saxon country, where language is not an additional 2–3-year commitment. Norway recently scrapped a law that “requires PhD students and postdoctoral researchers from other countries to undertake mandatory Norwegian language training”, as fears over an exodus of students mounted. Scientists prefer autonomy over coercion, and Europe must be able to offer such conditions to bright minds in both academia and in the job market.

Beyond policy frameworks, implementation challenges present equally significant barriers. In the case of Germany, for example, this is also a problem of personnel. The tedious process of registering as a foreigner with no language skills in Germany — akin to what Annie Lowrey has called a “time tax” — is effectively a glacial lottery where individuals behind large desks determine the applicant’s fate – often in an arbitrary manner. Anecdotally, a recent case involved an applicant who was initially denied an EU Blue Card they qualified for. After fearing they would have to leave the country, the applicant unexpectedly received a Blue Card instead of the standard residence permit they had been promised. Moreover, a pervasive sense of hostility often cannot be defused, while bringing a trusted person for translation purposes is generally frowned-upon and can lead to worse outcomes. Any serious effort to attract foreigners must reckon with their everyday reality in the country of destination.

From national success to EU coordination

It is noteworthy that Germany tops the OECD countries (Organisation for Economic Co-operation and Development) in terms of the 10-year retention of international graduates, a finding that is both surprising and insightful. The generous 18-month grace period post-graduation, where temporary employment does not interfere with a graduate’s residency prospects, makes a strong case for Germany in a world where foreign students in the US feel unwelcome and worried.

At the same time, a closer examination reveals that pull-factors are at risk and may be waning. Many Indian immigrants are adrift in a stagnating German economy, while China has managed to outcompete the European manufacturing giant in the export-oriented economic growth business. German automotive companies cannot keep up with China’s relentless push for innovation, compelling the industry to undertake large-scale lay-offs. While German ministers regularly visit India, urging skilled workers to bring their talents over to Europe, it’s important to recognise that a coordinated, pan-European approach ultimately benefits all Member States – including those currently facing economic challenges. Germany’s success should be emulated by other Member States, because the EU can only really compete with the rest of the world in the global race for talent if it acts as a bloc.

While the benefits of immigration are well-established in the literature, the conversation often abstracts the human experience that is fundamental to understanding such movements. There remains a significant knowledge gap regarding the livelihoods of Indian immigrants within the European context. The lack of comprehensive data presents a considerable limitation and is an impediment to policymaking. Indian immigrants are overrepresented in the German hospitality, information, communications, and tech sectors, and underrepresented in most others, data that is essential to identifying gaps that can become opportunities. As Germany makes it easier for Indians to bring their families over, there is a need to understand both who these newcomers are, and for those individuals to be aware of their rights and place in the community. This can only be achieved through better data, taking into account the personal experiences of the people themselves.

India-specific data of inflows for the entire EU is not comprehensively available. A recent effort by the New York Times to visualise data from Meta suggests that between 2019 and 2022, after a steep fall during the COVID shock, approximately 462,000 Indians emigrated to the EU27, compared to the approx. 138,000 Europeans that followed in the other direction (authors’ own calculations based on data available). Data For India paints a more nuanced picture and one that clearly showcases how the economic slowdown in Italy significantly hampered Indian migration, paving the way for (un)skilled labour to instead head to whoever could step in to fill the vacuum – Germany, in this case.

Data is necessary to help policymakers understand (and visualise) the urgency of their decisions. For Germany, more openness towards India could mean an additional 200,000 newcomers, at a time when the country is facing a 200,000 skilled worker shortage. But, much in the same way that those 200,000 immigrants will not be a perfect fit for these positions, so too will each of these migrants be unique in their own way. Indians in Italy, 75% of which in 2016 were Sikhs from Punjab and Haryana (data from 2016), differ from those in other countries in their skill level, origin, motivations, and more. Though this may be true for most countries, it is of particular importance for a subcontinent as rich in culture and diversity as India.

It’s not by luck that Germany is an easier case study than most of its European counterparts – even with its stringent privacy regulations. In its 2024 “Focus on India” strategy paper, Germany has shown the rest of the EU how a Member State can implement the EU’s common policy on India,

but also how it might effectively undercut its partners in doing so. And yet, as in the case of Italy, the Union could cease to benefit if a host country goes through a period of significant tumult – a reality that Germany could very well face at some point. There is no doubt that EU Member States are in competition with one another, but if talks are taking place only bilaterally, then the EU’s role will eventually be undermined (“Who do I call if I want to speak to Europe?”).

Ways forward

Based on the findings, problems and opportunities identified in this article, GenEI proposes the following targeted policy interventions to maximise the untapped potential and address the pressing demographic and economic challenges of both India and the EU. Strengthening coordination and communication on talent attraction EU Member States should refrain from acting in isolation when it comes to skilled migration. When individuals invest in learning a European language with the goal of working in a specific country, it reflects a clear intent to settle for the medium- to long-term. In this context, intense competition among EU countries can be counterproductive, particularly given the shared challenge of competing in the global race for skilled workers.

While administrative complexity in migration policy is an ongoing issue, one area where the EU can lead with immediate impact is in outreach and communication. The EU should take a more visible and coordinated role in marketing itself as an attractive destination for global talent. However, this effort must be accompanied by clear and consistent communication with Member State actors. At present, key initiatives—such as the CDMM (Cooperation and Dialogue on Migration and Mobility) Phases 1 and 2 remain underutilised or poorly understood at the operational level.

Member States should thus make greater use of the EU Blue Card as a recognisable and rights-based migration pathway. Germany’s successful implementation offers valuable lessons. While national permits may offer similar benefits, many migrants prefer permits they perceive as more secure and portable. Therefore, greater reliance on the EU Blue Card can enhance the EU’s overall appeal. Member States should also seek to strengthen the flow of information between EU institutions and Member State authorities involved in migration and labour market policy. This will ensure that key initiatives are understood and implemented effectively on the ground, and that local actors are better equipped to contribute to a coherent EU-wide approach.

Within the existing robust education frameworks, the EU should establish a tailored retention scheme specifically for high-performing Erasmus Mundus Master graduates from India. While the scholarship programs effectively improve the EU’s image in India and create valuable ambassadors when students return home, the economic benefits could be multiplied by offering structured pathways to retain exceptional talent. A dedicated internship program connecting these graduates with European employers in sectors facing critical skills shortages would maximise the return on the EU’s educational investment.

Enhancing data collection and information exchange

Effective migration and integration policy relies on accurate, detailed, and timely data. Just as EU Member States monitor the presence of their nationals abroad — as the German or French governments do with their citizens in India — it is equally important to have a clear understanding of the Indian diaspora in the EU. This includes not only overall numbers but also insights into their regional origins within India. India is marked by significant cultural, linguistic, and social diversity across its states, comparable in many ways to the diversity found among EU Member States. Recognising these differences is essential to support successful integration. Without sufficient information, policymakers, institutions, and civil society actors may be less equipped to foster meaningful inclusion and tailor support to migrants’ needs. Conversely, Indian professionals coming to Europe may lack key insights into the cultural and social nuances of their destination, limiting their ability to prepare for integration and identify meaningful points of connection.

Diplomatic missions should systematically collect data on the regional origins of skilled professionals migrating to the EU. This information should be shared with relevant ministries, the European Commission, and where appropriate, the public, to better inform integration efforts and support planning at all levels. Cooperation between India and individual Member States should be enhanced — though not at the expense of the EU — to improve mutual understanding of migration patterns and integration needs. This includes sharing insights that can help both sides prepare immigrants for life in the host country. Diplomatic missions should also continue building relations with the Indian diaspora abroad, and aid those who remain unaware of the importance of registering with one’s Embassy.

Finally, the EU should also increase support for projects that build crucial bridges between future generations on both sides. Civil society organisations and grassroots initiatives — especially ones that consider youth perspectives — can serve as powerful catalysts for deeper political and economic relations where traditional diplomacy faces limitations.

Developing a comprehensive EU handbook for skilled migrants

Skilled migrants often come from countries with strong service sectors, where administrative processes are typically handled by agencies or intermediaries, and individual involvement is minimal. In contrast, the administrative landscape in most EU countries requires a greater degree of self-navigation. Key tasks such as registering one’s residence, opening a bank account, understanding local regulations (e.g., compulsory schooling for children), and accessing healthcare or housing can be challenging to manage – especially upon first arrival. Currently, information is scattered across numerous portals, often lacking clarity, consistency, or accessibility. This can lead to confusion, inefficiencies, and even missed obligations—both for migrants and for host societies aiming to integrate them effectively.

GenEI suggests the development of a comprehensive handbook at both the EU and Member State levels that offers clear, concise, and practical information on the essential administrative steps migrants must take upon arrival. This guide should cover essential administrative steps such as residence registration, housing, banking, healthcare, education, employment rights, and access to integration programs. In addition to country-specific guidance, the handbook should outline EU-level rights and responsibilities—particularly for permit holders like those on the EU Blue Card. It should also direct migrants to further support, including official services, civil society organizations, and initiatives that foster collaboration between local communities and diaspora groups.

Conclusion

The world is entering a new era of competition amidst global challenges the likes of which have not been seen or overcome before. In these difficult times of upheaval, GenEI sees the relationship between India and the EU as a beacon of hope and stability that must be expanded upon – and quickly at that.

As demographic pressures mount and global competition for skilled talent intensifies, the window for establishing Europe as a destination of choice for Indian professionals is narrowing. The recommendations outlined here offer a balanced approach that respects both India’s development priorities and Europe’s economic needs. By moving beyond siloed national policies towards coordinated EU action, improving data collection, providing clear guidance for newcomers, and investing in civil society bridges, Europe can transform its relationship with India from a primarily transactional partnership into a sustainable talent ecosystem. For India, facilitating this talent exchange is a crucial catalyst for domestic innovation and global economic influence. For Europe, embracing this opportunity is not simply a policy choice – it is an economic imperative.