Saudi Arabia abolishes Kafala 'the tied visa' system, freeing 10 mn migrant workers: Impact on Indians

Saudi Arabia has officially abolished its decades-old Kafala (sponsorship) system, marking one of the most significant labour reforms in the Gulf’s recent history. Announced in June 2025, the move, part of Crown Prince Mohammed bin Salman’s Vision 2030 agenda, is set to reshape labour rights for over 10 million migrant workers, including more than 2.5 million Indians.

What was the Kafala system?

Under the Kafala framework, foreign workers in Saudi Arabia were legally tied to a local sponsor, typically their employer, who controlled their visa, residency, and work status. This meant that workers could not change jobs, travel abroad, or even renew their residence permits without their sponsor’s consent.

Human rights groups had long criticised the system for enabling exploitation, citing widespread reports of withheld wages, confiscated passports, and physical or psychological abuse. The Kafala model came under global scrutiny during the 2022 FIFA World Cup in Qatar, where thousands of migrant labourers, many from India, Nepal, and Bangladesh, worked under similar restrictive conditions.

What has changed now?

The labour reform initiative grants workers the right to change employers without prior approval after completing their contract or providing the required notice. They can also travel abroad without seeking an exit or re-entry permit from their sponsor.

Saudi Arabia’s Ministry of Human Resources and Social Development said the new rules are designed to create “a fairer, more competitive labour market” while ensuring compliance through digital monitoring systems.

Why did Saudi Arabia scrap the system?

The reform aligns with Saudi Vision 2030, the Crown Prince’s long-term strategy to modernise the economy, attract foreign investment, and reduce dependence on oil. It is also viewed as a step toward improving Saudi Arabia’s international reputation on labour rights and aligning with International Labour Organisation (ILO) standards.

Analysts say the reform signals a broader shift toward economic diversification and social openness, helping Saudi Arabia position itself as a more attractive destination for skilled talent and foreign capital.

What it means for Indian workers

Saudi Arabia's workforce of 1.34 crore foreign employees accounts for roughly 42% of the Kingdom’s population. Migrant workers, mainly from India, Bangladesh, Nepal, and the Philippines, form the backbone of its construction, manufacturing, agriculture, and domestic sectors.

For the Indian community, one of the largest expatriate groups in the Kingdom, the end of the Kafala system is expected to deliver significant relief:

• More freedom and mobility: Workers can change jobs more easily without employer consent.

• Reduced exploitation: The removal of exit permits is expected to curb cases of withheld passports and unpaid wages.

• Better job opportunities: Easier job movement may create a more competitive and transparent labour market.

However, experts caution that implementation and enforcement will be crucial. “The true success of this reform depends on whether these rights are consistently upheld through digital tracking and grievance mechanisms,” one analyst said.