India Saudi Arabia Relations

The Indian Prime Minister was visiting Saudi Arabia sometime back. The Prime Minister’s visit is considered important from the point of view of India-Saudi relations. The Saudi government-owned Saudi Aramco Company is going to buy 25 percent of the shares of India’s largest oil refinery during the relationship. If this deal is concluded, it will be Saudi Arabia’s largest investment in India. It is worth noting that India-Saudi relations have gone through a period of ups and downs in the last two decades, the main reason being Pakistan and Saudi Arabia’s extreme inclination towards Islam. Saudi Arabia is an important country in West Asia, which is also a major producer of oil. In this context, India’s growing relations with Saudi Arabia are considered important.

historical background

India’s diplomatic relations with Saudi Arabia began soon after Indian independence. To strengthen these relations, the then Prime Minister Jawaharlal Nehru and Indira Gandhi traveled to Saudi Arabia but India-Saudi relations have always been a buyer because of Saudi government’s inclination towards Pakistan and support of Pakistan’s side on Kashmir issue, etc. – Could not proceed with seller. The then Bajpai government and King Abdullah of Saudi Arabia tried to resolve differences between the two countries and King Abdullah’s visit to India was considered important from the point of view of bilateral relations. Despite the above, it would be more appropriate to underline the current Indo-Saudi relations as a change in the policies of the Saudi regime in recent years. After Mohammed bin Salman became the Crown Prince of Saudi Arabia, Saudi Arabia’s policies have evolved. Now, economic interests have become important in these policies, which have submerged traditional differences.

saudi arabia

Current state of west asia

The 9/11 attacks on America and the Arab Spring shook West Asia. The United States entered the region on the issue of ending terrorism, mainly affecting Iraq and Afghanistan, as well as problems facing governments in other countries. The Arab Spring began to overthrow the dictatorial governments established in West Asia one by one. Many dictatorial governments fell victim to this, Tunisia, Libya, Egypt, etc., as well as the Syrian conflict, which continues to the present. Against this backdrop, Yemen’s dictatorial regime was attacked by the Hawthi rebels. It is known that Saudi Arabia also has a dictator government. Saudi Arabia has always been highly concerned about the stability of its rule, thereby protecting itself from the Arab Spring. The 1600 km border line of Yemen meets Saudi Arabia, which is a matter of concern for the Saudi regime. The Iran-backed Houthi rebels have claimed responsibility for the recent drone attack on Saudi Aramco. Saudi Arabia’s historical tension with Iran is also not hidden from anyone. The Trump administration’s sanctions on Iran have also increased Saudi Arabia’s oil trade prospects.

India and West Asia

west asia

India has always been mainly dependent on imports for energy. India imports 70 percent of its energy needs. At the same time, along with economic development in the future, India’s energy requirement is also going to increase continuously. This situation will persist until renewable energy plays a major role in India’s energy needs. It is noteworthy that West Asia is rich in terms of petroleum products. Also, its geographical proximity provides India with a viable option to meet its energy requirements. India has been buying the most oil from Iran and Iraq for the last few years, but Iran, facing unstable Iraq and diplomatic and economic sanctions, is creating problems for India. In such a situation, Saudi Arabia located in South-West Asia provides a better option for India. It is important not only in terms of oil but also in terms of Indian workers in West Asia. The Indian diaspora is present in large numbers in the United Arab Emirates as well as in Saudi Arabia. In Saudi Arabia alone, this number is 2.6 million. It is important to note that India receives the highest remittance in the world, the main role being played by people living in West Asia. With this view, not only India wants to improve its relations with Saudi Arabia but also the countries of the entire West Asia, but also wishes for peace in the region.

Saudi Arabia’s watch on India

india

After the Second World War, after the increasing importance of oil and the discovery of tremendous oil reserves in Southwest Asia, America continuously tried to increase its influence in the region. The United States has had the greatest influence on Saudi Arabia, this has helped in protecting Saudi Arabia from external threats and internal instability and continues to fulfill the energy needs of the United States. It has been revealed some time ago that the US itself is producing such a quantity of oil that it can meet its needs, along with the help of Canada and Mexico, whatever shortage is left. is. In such a situation, the US is limiting its dependence on West Asia. It is also being speculated that after China, India will emerge as the most importing country in the future. In this situation, Saudi Arabia wants to transfer oil exports to the US to India. It is in this perspective that Saudi Arabia is considering investing heavily in India’s energy sector. Apart from this, India has been importing large quantities of oil from Iran but due to US sanctions, India has almost stopped importing oil from Iran. Therefore, Saudi Arabia wants to replace Iran in India’s oil trade. Apart from this, India is a fast growing economy and is soon going to become the third largest economy after America and China, due to this, Saudi Arabia cannot ignore India in foreign relations for long. India’s labor market is cheap and Saudi Arabia is also considering relocating its labor intensive establishments to India, which is also looking to get more economic benefits by reducing the labor load in its country.

Current Economic Relations

india and saudi arabia

Bilateral economic relations between India and Saudi Arabia have remained limited despite various efforts. The decline in oil prices in the last few years has further reduced this trade. Bilateral trade stood at $ 22 billion for the first 9 months of 2019, a 9 percent decrease from the previous year. This trade is highly imbalanced, with Indian exports accounting for only 20 percent of the total trade, on the other hand, the major share in this trade is related to oil. Both India and Saudi Arabia are in favor of the fact that there should not only be diversity in trade but also it should be balanced, so that it can remain sustainable for long. Saudi Arabia’s foreign direct investment in India is 0.05 percent of the total foreign investment due to the ups and downs in the relationship, which also naturally needs to be increased. However, Saudi Arabia has also included India in the list of eight key partners in its Vision 2030 strategic document. Also, Saudi Aramco is going to be a major partner in the proposed $ 44 billion refinery in Raigad on the west coast of Maharashtra. In addition, Saudi Arabia is also supporting India’s strategic petroleum reserves. Saudi Prince Mohammed bin Salman made a commitment to invest 100 billion dollars in India during his visit to India in February this year. This investment will not only be limited to the energy sector but will also be related to other sectors like agriculture, fintech, skill development etc.

Strategic partnership council (spc)

  • The Indian Prime Minister’s recent visit to Saudi Arabia has yielded a significant result. India and Saudi Arabia have agreed to form a Strategic Partnership Council (SPC). India will be the fourth country after England, France and China with which Saudi Arabia is going to form such a council.
  • The Council will be chaired by the Indian Prime Minister and the Saudi Crown Prince. Foreign ministers and finance ministers of both countries will also be included in this council.
  • The Council will be instrumental in implementing various decisions between the two countries as it will be chaired by the Executive Heads of both the countries.
  • This Council will play an important role in establishing better synergy between the two countries in the development of Indian infrastructure, agriculture, start-ups, skill development, information technology etc. Also, labor intensive industries displaced from Saudi Arabia will encourage Make in India in India.

Relationship challenges and solutions

  • Saudi Arabia’s Pakistan policy has always affected Saudi relations with India. Saudi Arabia is an Islamic country, so naturally it considers Pakistan closer to itself. At the same time, Saudi Arabia has been supporting Pakistan on Kashmir issue. But there has been a change in Saudi policy for some time, when the Central Government abolished the special state status of Jammu and Kashmir, then Saudi Arabia described it as an internal matter of India. At the same time, despite the strong opposition from Pakistan, he supported the invitation of India to the Organization of Islamic Cooperation. Thus, it represents Saudi Arabia’s changing policy towards India.
  • India has an adverse trade balance with Saudi Arabia. Due to which India has a big trade deficit. The two countries are jointly striving for diversity in the field of trade and cooperation, in this regard, the formation of SPC is being considered.
  • The politics of West Asia has become complex in the last decades. India has broad interests in this area. India is a strategic partner of Israel and also has friendly relations with Iran. Saudi Arabia’s relations with these countries remain tense. In such a situation, India has to strike a balance between these countries, which is a challenging task.

The conclusion

It is known that India is dependent on imports for its energy requirements and Saudi Arabia is also looking at India as a market for its oil exports. Currently, India-Saudi relations are moving ahead with the oil trade and the two countries have also come closer at the economic and strategic level. It is the need of the hour that there should be a strong partnership between the two countries so that both countries can fulfill their common interests. Pakistan has been an important issue between the two countries but current policies indicate that Saudi Arabia is thinking ahead of Pakistan with respect to India. India and Saudi Arabia are realizing that if both countries share their full potential together, it will be equally beneficial for both countries. This will provide stability not only on land but also in the Arabian Sea.

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