India - Saudi Arabia Relations

IN NEWS:

• Recently, Saudi Arabia’s Crown Prince Mohammed bin Salman Al Saud and Prime Minister Narendra Modi co-chaired the first summit-level meeting of the India-Saudi Arabia Strategic Partnership Council (SPC).
• The India-Saudi Arabia Strategic Partnership Council was set up in 2019, making India the fourth country with which Riyadh formed such a partnership, after the UK, France, and China.

MORE ON NEWS:

• The first summit-level meeting of the India-Saudi Arabia Strategic Partnership Council (SPC) comes after the G20 summit in New Delhi, where Prime Minister Narendra Modi, along with Saudi Arabia’s Crown Prince Mohammed bin Salman and President Joe Biden, announced the India-Middle East-Europe Economic Corridor, a massive infrastructure project that would connect India to Europe via WestAsia, and could rival China’s Belt and Road Initiative.
• India and Saudi Arabia signed eight agreements, including on upgrading their hydrocarbon energy partnership to a comprehensive energy partnership for renewable, petroleum, and strategic reserves and creating a joint task force for $100 billion in Saudi investment.
• The two sides also discussed the possibility of trading in local currencies and expediting negotiations for a free trade agreement between India and the Gulf Cooperation Council, of which Saudi Arabia is a member.
• Prime Minister Modi described Saudi Arabia as one of India’s most important strategic partners.

BACKGROUND:

• India and Saudi Arabia enjoy multifaceted relations reflecting the centuries old economic and socio-cultural ties.
• India and Saudi Arabia are old business partners; their trade relations go back several centuries in time.
• Besides being a major trade partner, India sees the Kingdom as a major pillar for its energy security and an important economic partner for investments, joint ventures, transfer of technology projects.
• The two countries established diplomatic relations in 1947.
• The visit of King Abdullah to India in January 2006 was a watershed moment in the relationship. The royal visit resulted in the signing of the Delhi Declaration, which was followed in 2010 by the Riyadh Declaration, which elevated bilateral ties to a strategic partnership.
• Prime Minister Modi’s visit to Riyadh in April 2016 captured the spirit of enhanced cooperation in the political, economic, security, and defense realms.
• The visit of Crown Prince Mohammed to India in February 2019 continued this momentum. It was announced that the kingdom would invest approximately $100 billion in India, and six MoUs and agreements were signed in a range of fields. An agreement was also signed to pave the way for Saudi Arabia to join the International Solar Alliance (ISA), launched by India.
• The Hon’ble Prime Minister of India visited Riyadh on October 28–29, 2019, during which the Strategic Partnership Council (SPC) Agreement was signed, which established a high-level council to steer the Indo-Saudi relationship.

AREAS OF COOPERATION:

• Economic:
  • Trade
    • Saudi Arabia is India’s fourth-largest trading partner. During FY22, bilateral trade was valued at USD 42.86 billion.
    • During this period, India’s imports from Saudi Arabia were valued at USD34.10 billion and exports to Saudi Arabia were worth USD8.76 billion.
    • For FY 2022-23, Saudi Arabia remained the 3rd largest Petroleum Products (which includes LPG) sourcing destination for India accounting for 11.2% of the total imports.
  • Investment:
    • There are around 2,783 Indian companies registered as joint ventures/100% owned entities with investments worth approximately USD2 billion in the Kingdom (January, 2022). Major Indian companies and corporate groups such as L&T, TATA, Wipro, TCS, TCIL, Shapoorji & Pallonji, etc. have established a strong presence in Saudi Arabia.
    • Saudi Investments in India amounted to USD3.15 billion (March, 2022). Major Saudi investment groups include ARAMCO, SABIC, ZAMIL, E-holidays, and Al Batterjee Group. Additionally, Soft Bank’s ‘Vision Fund’ has invested in Indian Start-ups such as Delhivery, FirstCry, Grofers, Ola, OYO, Paytm and PolicyBazaar.
• Cultural:
  • Yoga has also become a very popular activity in Saudi Arabia, particularly after it was recognized as a ‘sports activity’ in November 2017.
  • The annual Hajj pilgrimage is another important component of Indo-Saudi bilateral relations. India’s Hajj quota for 2022 was 79,237 pilgrims.
  • The year 2021-22 commemorates 75 years of India’s independence as ‘Azadi ka Amrit Mahotsav’. This celebrations also coincides with 75 years of establishment of diplomatic relations between India and Saudi Arabia.
  • As part of this celebration the Embassy is conducting a host of events from May 2021 till August 2023, which include cultural events, exhibitions, academic activities like quizzes, international film festivals, and sports activities like golf tournament and cycle rallies.
  • The 150th birth anniversary of Mahatma Gandhi was marked by a series of events that culminated on Oct. 02, 2019 with the unveiling of the Gandhi bust at the Embassy. Further, a large event was organized by the Embassy to commemorate the 550th birth anniversary of Shri. Guru Nanak Dev Ji on Nov. 14, 2019.
• Diaspora:
  • There are over 2.8 million Indian expatriates gainfully employed in the Kingdom who send valuable foreign exchange remittances.
  • The Diaspora also plays a significant role in strengthening the bilateral ties between the two countries. Saudi leadership too has acknowledged the contribution made by Indian community to the development of Saudi Arabia.
• Defense:
  • The defence partnership has witnessed tremendous growth in recent years. Then Army Chief General Manoj Mukund Naravane made a landmark visit to Saudi Arabia in December 2020.
  • There is extensive naval cooperation between India and Saudi Arabia, and two editions of the bilateral naval exercise, Al Mohed al Hindi, have been concluded so far.
  • Both sides also cooperate closely in the domain of defence industries and capacity-building.
  • India and Saudi Arabia signed a defense cooperation pact in 2014 under which the two countries will share defense-related information, undertake military training and education, and also cooperate in the field of security.
• Collaboration during COVID-19:
  • Throughout the pandemic, both nations shared national experiences and supported each other to ensure continued flow of food, medicines and other essential items.
  • In February and March, 2021, in two separate consignments, India provided 4.5 million COVISHIELD vaccines to the Kingdom, whereas, during the second wave, the latter provided India with COVID-relief material, particularly liquid oxygen. Further, during the pandemic, the Saudi authorities opened up the healthcare system for the Indian community and provided free healthcare services.

• Denunciation of terrorism:
  • One of the reasons for the two countries coming closer has been the concern about growing extremism and terrorism. This effort to collectively fight terrorism has extended at the bilateral level as the two countries have signed a memorandum of understanding to combat terrorism.
  • The Saudi government has regularly helped India to apprehend key terror suspects. For instance,in 2012 Saudi Arabia helped India arrest terror suspect Zabiuddin Ansari alias Abu Jundal accused of being involved in 2008 Mumbai attacks. In December 2016, Saudi Arabia deported a ring leader of a fake Indian currency note racket, Abdul Salam.
• Strategic cooperation:
  • The stability and security of the Gulf region and the Indian subcontinent are closely interlinked.
  • From an Indian perspective, the main challenges to regional stability include the  US-Iran hostility ,the Palestine issue etc.  South Asia is also facing serious challenges, including terrorism and radicalisation.
  • Cyber security and maritime security are other major issues in the region. Such developments have given space for the formation of positive relations between India and Saudi Arabia given the Kingdom’s role and influence in West Asia and India’s relevance in South Asian geopolitics. 
  • To enhance strategic cooperation between the two countries, Saudi military cadets have also engaged with the India’s NDA for military training.

CHALLENGES:

• Security concerns emanating from gulf nations:
  • Security concerns emanating from gulf nations like the transnational terrorist linkages that exist between India and Gulf Arab countries.
• Nationalization drives:
  • The workforce nationalization in Gulf countries would adversely impact Indian expatriates in the Gulf countries, including Saudi Arabia.
  • For instance, the Nitaqat program, which was introduced by Saudi Arabia in 2011 in order to increase the employment of Saudi nationals, has upset the large expatriate community of Indians working in the kingdom.
• Chinese presence:
  • An agreement between Iran and Saudi Arabia in March 2023, brokered by Beijing, could put China in a leading role in West Asia, including Saudi Arabia, a position once held by the United States of America.
• Arab- Iran Conflict:
  • The differences between Iran and the Arab world hinder India’s engagement in the Middle-east region.
  • Balancing the relationship sometimes results in reluctance of some strategic agreements.
• Lack of a comprehensive policy:
  • Unlike the Act East policy, India has not established a comprehensive West Asia policy despite the regions having similar geopolitical significance

WAY FORWARD:

• India and Saudi Arabia have enjoyed cordial and friendly relations for centuries. A more balanced trade and acceleration in investment would further complement the centuries-old relationship between the two nations.
• With both India and Saudi Arabia focused on widening the scope of bilateral engagement, the two countries may balance each other’s interests while at the same time not overlooking each other’s sensitivities.
• The two countries may also address some of the issues that are likely to impact the partnership, such as the grievances of the Indian Diaspora.
• The task ahead for the countries is to put into action the promising agreements signed between the two countries and take stock of them from time to time for effective outcomes.

PRACTICE QUESTION:

Q. The Prime Minister of India described Saudi Arabia as “one of the most important strategic partners of India”. In this context, critically analyse India's relationship with the kingdom.