Print Friendly, PDF & Email

Insights into Editorial: Substance across the Arabian Sea

Insights into Editorial: Substance across the Arabian Sea

Context: PM Modi embarks on two-day visit to Saudi Arabia

India and Saudi Arabia signed a raft of key pacts to significantly ramp up ties in several key sectors including oil and gas, renewable energy and civil aviation during Prime Minister Narendra Modi’s two-day visit to the Gulf nation.

India, the world’s third-largest oil consumer, imports 83 per cent of its oil needs.

Saudi Arabia is its second-biggest supplier after Iraq. It sold 40.33 million tonnes of crude oil to India in 2018-19 fiscal, when the country had imported 207.3 million tonnes of oil.

India buys some 200,000 tonnes of LPG every month from Saudi Arabia.


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.


India, Saudi Arabia to Set up Strategic Partnership Council:

After the delegation-level talks, the two sides signed an agreement to establish the India-Saudi Arabia Strategic Partnership Council to coordinate decisions regarding strategically important issues.

The council will be headed by Modi and the crown prince and it will meet at an interval of two years.

The two leaders condemned terrorism in all its forms and manifestations, and agreed to step up bilateral security cooperation.

They also discussed cooperation in agriculture, oil and gas, maritime security, innovative technology, renewable energy, trade and investment between the two countries during their talks.

An agreement was signed on bringing coordination between e-migration systems of the two countries.


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.


Importance of India to Saudi Arabia:

  • Enhanced ties with India is important for Saudi Arabia as well. The kingdom is facing economic strain in the wake of persistently weak oil prices.
  • The U.S. is no longer as dependent on the region for energy as it used to be, thanks to the shale boom.
  • 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.
  • Pakistan also refused to join Saudi Arabia’s war coalition that has been bombing Yemen for the past one year in the name of fighting the Iran-backed Shia rebels.



India and Saudi Arabia have enjoyed traditionally close and friendly relations. Saudi Arabia has been one of the largest and reliable suppliers of India’s energy needs.

Both India and Saudi Arabia are redefining their foreign policy priorities at a time of global and regional turmoil.

For New Delhi, Saudi Arabia and the Arab Gulf states are becoming key interlocutors in the Middle East.

For Saudi Arabia, India is one of the eight major powers with which it wants to forge strategic partnerships as part of its Vision 2030.

It is not surprising, therefore, that there is a new energy in India-Saudi bilateral partnership.