Two days after the launch of the India-Middle East-Europe Economic Corridor, Prime Minister Narendra Modi stressed the importance of the relationship with Saudi Arabia as “one of India’s most important strategic partners”. This conversation between the two countries took place during the state visit of Saudi Arabia’s Crown Prince Mohammed bin Salman.
The discussions covered various aspects of cooperation including energy, defence, security, education, technology, transport, healthcare, tourism, culture, space and semiconductors.
India-Saudi Arabia bilateral relations
- India and Saudi Arabia have centuries-old cordial and friendly relations in the economic and socio-cultural fields.
- Since the establishment of diplomatic relations in 1947, high-level visits have taken place between the two sides.
Economic cooperation between India and Saudi Arabia:
- In the financial year 2022-23, bilateral trade between India and Saudi Arabia is expected to increase unprecedentedly to $52.75 billion.
- India’s exports to Saudi Arabia reached $10.7 billion, showing a significant growth from $8.8 billion recorded in 2021-22.
- India is the second largest trading partner of Saudi Arabia, while Saudi Arabia is the fourth largest trading partner for India.
- Indian investments in Saudi Arabia have now reached an estimated amount of $2 billion, reflecting their growing economic ties.
- In contrast, Saudi Arabia is the 18th largest investor in India, with a total investment of $3.14 billion in the country till March 2022.
- During the visit of the Saudi Crown Prince to India in February 2019, a significant commitment was announced in which Saudi Arabia promised to invest $100 billion in various sectors in India.
Energy partnership between India and Saudi Arabia
- Energy cooperation is an important element in India-Saudi Arabia bilateral relations, with Saudi Arabia playing a key role in ensuring India’s energy security.
- Saudi Arabia has been India’s third largest supplier of crude oil and petroleum products during the financial year 2022-23.
- India imported 39.5 million metric tonnes (MMT) of crude oil from Saudi Arabia in FY 2022-23, which is 16.7% of its total crude oil imports.
- Additionally, India’s liquefied petroleum gas (LPG) imports from Saudi Arabia reached 7.85 MMT, accounting for 11.2% of total petroleum gas imports in FY23.
Indian community in Saudi Arabia
- The Indian community in Saudi Arabia, numbering approximately 2.2 million, represents the largest expatriate group in Saudi Arabia.
- Indian expatriates constitute 7% of Saudi Arabia’s population, playing a vital role in the country’s economic development.
- During Prime Minister Modi’s visit to Riyadh in October 2019, both countries jointly announced the integration of India’s e-Migrate system with Saudi Arabia’s e-Tawtiq system. The purpose of this integration was to streamline and enhance the migration process for Indian workers in the Arab state.
- The annual Haj pilgrimage has great importance in the bilateral relations between India and Saudi Arabia. During the visit of the Saudi Crown Prince to New Delhi in February 2019, India’s Haj quota for the year 2019 was increased to 24,975. This increase led to 200,000 Indians being allowed to participate in the Haj pilgrimage in August 2019.
Historic Economic Corridor
- The highlight of the G-20 summit was the launch of the India-Middle East-Europe Economic Corridor. Prime Minister Modi has described this corridor as a historic step to connect India, West Asia and Europe, emphasizing its potential to boost economic growth, enhance the energy sector and promote digitalization. This initiative will not only strengthen India and Saudi Arabia bilateral relations but also contribute to regional stability.
Strategic Partnership Council (SPC)
- During the G-20 meeting, Prime Minister Modi and Crown Prince Bin Salman co-chaired the first meeting of the India-Saudi Strategic Partnership Council (SPC), established in October 2019. The council is serving as a platform to deepen cooperation between the two countries and promote long-term strategic relations. At the meeting, Saudi Arabia’s Crown Prince Mohammed bin Salman Al Saud and Prime Minister Narendra Modi discussed trade and security ties. Had extensive discussion focusing on expansion of. India becomes the fourth country after Britain, France and China with which Riyadh has entered into such a strategic partnership.
Objectives of Strategic Partnership Council
- The purpose of creation of the SPC is to establish a high-level council to advance India-Saudi relations. PM Modi has stressed that the SPC will usher in a new era of cooperation in various sectors including trade, investment, security and defence.
S. PC structure
- It consists of two primary pillars – the Committee on Political, Security, Social and Cultural Cooperation and the Committee on Economy and Investments.
- Within these sub-committees, meetings take place at four different functional levels:
- The summit, which includes the Prime Minister and the Crown Prince.
- ministerial discussions
- meetings of senior officials
- Joint Working Group (JWG) for specific collaborative initiatives
Summit level and ministerial meeting outcomes
- Investments: The outcomes of the meeting included streamlining efforts to realize the $100 billion investment pledge made by Mohammed bin Salman during his visit to India in February 2019. The meeting has identified 41 areas of cooperation in sectors such as agriculture and food security, energy, technology and information technology and industry and infrastructure.
- Talks and Agreements: During recent talks, India and Saudi Arabia have decided to accelerate the $50 billion West Coast Refinery project. During this, key areas for deeper cooperation were identified including energy, defence, semiconductors and space. Apart from this, eight agreements have been signed to increase cooperation in various fields including digitalization and investment.
- West Coast Refinery Project: Both countries have expressed strong support for the West Coast Refinery Project. It is a trilateral effort involving ARAMCO, ADNOC and Indian companies, with $50 billion earmarked for investment. Also, a joint task force was established to facilitate the $100 billion investment promised by Saudi Arabia. The move marks a significant progress in energy relations between the two countries, moving towards a “comprehensive energy partnership”.
- Economic Agreements and Cooperation: During the visit, several agreements were signed, including agreements between India’s Central Vigilance Commission and the Saudi Vigilance and Anti-Corruption Authority as well as agreements between Saudi and Indian import banks. Additionally, collaboration was established between the National Institute of Technology of India, the Sea Water Conversion Corporation of Saudi Arabia and the National Archives of India and the King Abdulaziz Foundation of Saudi Arabia. These agreements will promote cooperation in areas such as anti-corruption efforts, technology, education and archival research.
- Bilateral relations and tourism promotion: The joint statement issued at the end of the visit emphasized Saudi Arabia’s commitment to remain a “reliable crude oil supply partner and exporter.” Both countries welcomed the expansion of private sector participation in the agriculture and food industries. Emphasis was placed on strengthening defense and counter-terrorism cooperation, with a special focus on preventing access to “missiles and drones” for terrorist activities. Furthermore, the talks also focused on promoting tourism and showcasing the ongoing reforms in Saudi Arabia.
BRICS membership and comprehensive cooperation
- The importance of this visit has further increased with Saudi Arabia’s recent joining BRICS. The discussions covered various sectors including defence, energy, security, education, technology, transportation, healthcare, tourism, culture, space and semiconductors. During this, possibilities of various cooperation were highlighted.
- Official talks have also addressed regional issues, including Yemen and Afghanistan. Saudi Arabia expressed gratitude for India’s humanitarian assistance to the war-affected Yemeni people. Both countries advocated for a government in Afghanistan that represents the entire Afghan population.
strong relationships between people
- Beyond economic ties, relations between India and Saudi Arabia are rooted in the depth of people-to-people ties. An Indian community of approximately 2.4 million lives in Saudi Arabia, which plays an important role in the development of the host country. It acts as a bridge between the two countries which enhances multi-dimensional relations between them.
- Additionally, Saudi Arabia facilitates the annual Haj pilgrimage for over 175,000 Indians, highlighting the cultural and religious ties shared by the two countries.
The beginning of a new era of cooperation
- The state visit of Mohammed bin Salman to India is ushering in a new era of cooperation and friendship. Building on a solid foundation of historical ties and shared interests, the visit is expected to strengthen the strategic partnership and take India-Saudi Arabia relations to greater heights. Such progress would benefit both countries and contribute to regional and global stability.
- The state visit of Crown Prince Mohammed bin Salman to India is an important milestone in the growing India-Saudi Arabia relations. It marks the commitment of both countries to multidimensional cooperation, economic development and regional stability, underscoring the importance of this strategic partnership in an ever-evolving global landscape.
- Additionally, India can use its friendly relations with Saudi Arabia to persuade Pakistan to use its influence on Pakistan in controlling the Taliban in Afghanistan.
- A joint collaborative effort of both the economies will drive transformation in the South-West Asia sub-region.
- Currently India has a trade deficit of $25.25 billion with Saudi Arabia. India should focus more on promoting exports in various sectors. This will enable us to maintain trade balance with the state while building healthy trade relations.