India and Saudi Arabia have traditionally enjoyed close and friendly relations. The number of high-level visits by political leaders from both countries manifests the strategic importance accorded by both countries to one another
Recent Developments
- There is a substantive shift happening in India’s approach to the Middle East policy.
- India has pushed an aggressive strategy of partnering with key regional powers like Saudi Arabia, the United Arab Emirates and Israel in a bid to attract investments and forge deeper security partnerships.
- India and Saudi Arabia are moving from a purely buyer-seller relationship towards a closer strategic partnership that will include Saudi investments in downstream oil and gas projects.
- India is showing signs of overcoming its reluctance to forge security partnerships with the Gulf states whose security apparatuses had long been closely associated with Pakistan.
- During Prince Salman’s visit to New Delhi earlier this year, Saudi Arabia promised to share more intelligence to boost counterterrorism cooperation with India.
- Saudi Arabia took a positive approach towards abrogation of Article 370 in Jammu and Kashmir.
- Saudi Arabia has signalled that it understands Indian concerns and sensitivities on the Kashmir issue.
- Formation of the India-Saudi Strategic Partnership Council that will be led by the leaderships of both the countries to “help India address its expectations and aspirations.”
Current Scenario
- There is strong political will in both India and Saudi Arabia to take relations to new heights.
- The current scenario is unlike the Cold War period when India-Saudi Arabia ties were mainly determined by the Pakistani factor.
- For decades, this prevented both New Delhi and Riyadh from discovering the strategic importance of engaging one another.
- Lately, there have been indications that Saudi Arabia is less interested in meddling in India’s internal affairs.
- Alongside the growing politico-economic ties, cooperation in the security realm is significantly progressing.
- While India continues to face cross-border terrorism, Saudi Arabia remains vulnerable to frequent missile and drone attacks on its civilian dwellings as well as on its major oil fields.
- An agreement to constitute a “Comprehensive Security Dialogue” at the national security adviser (NSA) level and a Joint Working Group on Counter-Terrorism is timely
Why Saudi Arabia is important for India
Saudi Arabia is an important and reliable source of India’s energy requirements. India imports around 18% of its crude oil from Saudi Arabia, making it the 2nd-largest source of crude oil for the country. It is also now India’s fourth largest trading partner with bilateral trade at $27.48 billion in 2017-18 Saudi investment of around $100 billion is in the pipeline in areas ranging from energy, refining, petrochemicals and infrastructure to agriculture, minerals and mining.
Saudi Aramco is participating in a major refinery and petrochemical project on India’s west coast. Defence, security, trade, culture, education and people-to-people contacts are the important areas of bilateral cooperation with Saudi Arabia
During his visit to New Delhi in February 2019, the Crown Prince had committed to invest over $100 billion in sectors of priority in India.
Demand from China is also receding in the wake of a slowdown. Besides, competition in the oil market is expected to tighten with a sanctions-free Iran entering the global economic mainstream without any bars. In this context, India is a vital market for Saudi Arabia. There is believed to be friction between Islamabad and Riyadh over the former warming up to Tehran and their growing energy cooperation.
Why India is important for Saudi Arabia
- Pragmatism is dictating Saudi posture as the very future of the kingdom’s economic model is at stake.
- Economic reform programs are underway in Saudi Arabia, for which it needs India’s economic as well as technological assistance.
- Saudi Arabia appears to have limited experience in countering threats from groups like Houthi militias
- This is an area where India’s expertise in fighting such threats could be imparted to the Saudi side, by enhancing joint military training programs.
Challenges for India
- The politics of the Middle East are complex and multidimensional.
- The Saudi Arabia-Turkey rivalry is one of the dimensions.
- Another dimension is the Saudi Arabia-Iran rivalry.
- India has close relations with both Saudi Arabia and Iran. However, India is yet to work out a way to balance its ties with Iran on the one hand and Saudi Arabia and the United States on the other.
Way Forward
- Uplifting cooperation in the maritime security domain from the current status would be in the interest of both countries.
- Holding joint naval exercises is important for maritime security cooperation as well as to safeguard international trade via sea routes.
- Space is an important domain where bilateral engagements could be strengthened.
- India could explore the possibility to engage with the newly established Saudi Space Agency.
- The potential areas for next stage of bilateral cooperation could be 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 boosting ‘Make in India’.
MoUs signed between India and Saudi Arabia:
- An MoU was also signed to roll out RuPay card in the Kingdom making Saudi Arabia the third country in the Persian Gulf after the UAE and Bahrain to introduce India’s digital payment system.
- The two sides also vowed to further enhance defence industries collaboration and security cooperation. The first naval exercise between the two nations will take place by end of this year or early next year.
- The two countries also decided to move ahead on the ambitious west coast refinery project in Raigarh in Maharastra which will involve investments from Saudi oil giant Aramco, UAE’s Abu Dhabi National Oil Company and Indian public sector oil firms.
- An MoU for a joint venture between Indian Oil Middle East and with Saudi company Al Jeri for downstream cooperation and setting up of fuel retail business in the Gulf country was also signed, expanding energy ties between the two countries.
- Pragmatism is dictating Saudi posturing as the very future of the Saudi economic model is at stake. It needs new partners like India.
- It is not without significance that within a week of India’s move, one of the biggest ever foreign investments in the country was announced by New Delhi.
Saudi Arabia with India in recent times:
- India is the source of the largest expatriate community in Saudi Arabia with a 2.6 million strong diaspora.
- Unlike in the past, New Delhi is no longer diffident about leveraging its diaspora in its bilateral engagements.
- Modi pointedly referred to the “hard work and commitment” of the Indian community in Saudi Arabia in strengthening the bilateral relationship between the two nations.
- Nearly two lakh Haj pilgrims and over three hundred thousand Umrah pilgrims from India visit Saudi Arabia every year and acceptance of Rupay card will allow them to transact at a cheaper rate.
- The World Bank’s recently published “Ease of Doing Business” rankings included both India and Saudi Arabia in its ten “most improved economies”.
- India and Saudi Arabia ranked 63rd and 62nd respectively. A joint collaborative effort of both economies will transform the Southwest Asia sub-region.
- India’s sustained outreach to Saudi Arabia has paid rich dividends on the political front with Riyadh taking a positive approach on the Kashmir question since the Modi government’s decision to revoke Article 370 on August 5.
- Unlike Turkey and Malaysia, it has cautioned Pakistan against escalating the crisis.
- Despite Pakistan Prime Minister Imran Khan making a personal visit to Riyadh and traditionally close Saudi-Pakistan ties, Saudi Arabia has signalled that it understood Indian concerns and sensitivities on the issue.
