India-Saudi Arabia Relations

PM Narendra Modi visited Saudi Arabia in October, 2019. Politically, New Delhi and Riyadh acknowledged each other’s core interests and accommodated them. PM Modi also delivered the keynote address of the Future Investment Initiative (FII) forum also dubbed as the ‘Davos in the Desert’. A number of developments took place during the visit and the prominent areas are highlighted below:

Areas of mutual cooperation –

  1. Terrorism – Both sides condemn terrorism in all forms and maintain that no particular religion, race or culture should be linked with international terrorism.
  2. Both sides sealed 12 MoUs on issues such as preventing narcotics trafficking, renewable energy, training of diplomats, workforce skilling, defence industry production, security collaboration, and the use of RuPay cards in Saudi Arabia.
  3. Investments – There is a substantial potential for Indian investments in Saudi Arabia. There is a chance of greater private investment from India to Saudi Arabia. Saudi investment in India, too, remains far below potential. The kingdom’s cumulative investments in India are only $229 million, or 0.05% of the total inbound FDI. (Note: Also read in conjunction the section on ‘oil diplomacy’ below.) The following five “trends” in India with global investors’ remit: technology and innovation, infrastructure development, human resource development, environment and business-friendly governance will certainly create a conducive atmosphere.
  4. Culture – India cleared a MoU that will help Haj pilgrims to travel comfortably in Saudi Arabia during the pilgrimage seasons.
  5. Palestine Issue – Both sides seek peace in areas embroiled in conflict like Yemen or Syria. Also both sides are in favour of lasting peace in the Palestinian territories for the establishment of the independent Palestinian state based on the pre-1967 borders with “Jerusalem as its capital.”
  6. Political stability – Saudi Arabia showed an “understanding” of recent Indian actions in Jammu and Kashmir and India “strongly condemned” the various attacks on Saudi civilian facilities (the attack on Aramco plants).
  7. Defence – The bilateral ties of both countries in the areas of defence, security and anti-terror cooperation has intensified and the first naval exercise is to be held soon.
  8. Strategic Partnership Council (SPC) – A bilateral Strategic Partnership Council (SPC) to be co-chaired by the Indian Prime Minister and the Saudi Crown Prince is a defining development. Given the centralised nature of executive at both ends, it would expedite the decision-making process. The SPC would be a permanent bilateral platform with two verticals jointly serviced by the two Foreign and Trade and Industry Ministries.

Specific Issues –

Bilateral Trade – Trade between the two nations has drifted downwards largely due to lower crude prices. According to the latest Indian data, the bilateral trade in the first nine months of 2019 stood at $22,416 million, having fallen by 9.2% over the corresponding figure in 2018. It was 5:1 in kingdom’s favour and was dominated by the traditional commodities, revealing the need for greater Indian export promotion efforts.

Remittances – Though the kingdom’s Indian community has come down marginally to 2.6 million, they, nevertheless, are still the largest foreign community and their annual homeward remittances remain steady at $11 billion.

Oil diplomacy – The kingdom’s Vision 2030, a strategic document, lists eight major partner countries including India, the world’s third largest oil importer. Saudi Aramco is to be one of the two strategic partners in the proposed $44 billion, 1.2 mbpd PSU refinery at Raigarh on India’s west coast. It is also to acquire a fifth of the Reliance refinery at Jamnagar and to participate in India’s Strategic Petroleum Reserves. If realised, these investments could total nearly $30 billion, catapulting the kingdom to fourth position among countries investing in India. Earlier, Saudi Crown Prince Mohammed bin Salman had committed to investing $100 billion in India.

Further areas for co-operation –

  • Greater bilateral synergy in Indian infrastructure, agriculture, start-ups, skilling and IT.
  • Shifting some labour-intensive establishments from Saudi Arabia to India would serve the respective national priorities by reducing the kingdom’s expatriate population and boost ‘Make in India’.
  • There is a need for “adding greater dynamism and depth to the bilateral strategic partnership”.

 

Sources –

https://www.thehindu.com/opinion/lead/substance-across-the-arabian-sea/article29845919.ece

https://mea.gov.in/bilateral-documents.htm?dtl/31982/Joint+Statement+on+Visit+of+Prime+Minister+of+India+to+the+Kingdom+of+Saudi+Arabia

https://www.thehindu.com/news/national/india-saudi-form-strategic-council/article29826191.ece