THE CONTEXT: India and Saudi Arabia recently held the first summit-level meeting of the Strategic Partnership Council (SPC) which has strengthened and deepened their bilateral relations. The meeting was held on the sidelines of the G-20 summit held in India. In this context, this article analyses the significance of the SPC and the various aspects of the India-Saudi bilateral relations.
The Background: The pact to establish the Strategic Partnership Council (SPC) was signed during PM Modi’s visit to Saudi Arabia in October 2019. It essentially aimed to establish a high-level council to steer the Indo-Saudi relationship. New Delhi envisaged that the SPC would begin a new era of cooperation across sectors such as trade, investment, security and defence cooperation.
The SPC has two main pillars:
1. Committee on Political, Security, Social and Cultural Cooperation; and
2. Committee on Economy and Investments
Both sub-committees have four functional levels of engagement:
1. Summit level (Prime Minister & Crown Prince);
2. Ministerial-level;
3. Senior Officials’ Meetings; and
4. Joint Working Groups (JWGs)
Four JWGs have been formed under each sub-committee:
The JWGs under the Political Committee are Political & Consular, Legal & Security; Social & Cultural; and Joint Committee on Defence Cooperation.
The JWGs under the Economic Committee are Agriculture & Food Security; Energy; Technology & Information Technology; and Industry and Infrastructure.
THE PILLARS OF PARTNERSHIP
AREA OF COOPERATION
FACTS/DATA
ECONOMIC
India is Saudi Arabia’s second-largest trade partner; Saudi Arabia is India’s fourth-largest trade partner.
Bilateral trade in FY2022-23 was valued at $52.76 billion.
Trade with Saudi Arabia accounted for 4.53% of India’s total trade in FY23.
More than 2.4 million people from India have settled in Saudi Arabia and are a source of over the US $11 billion annual remittances to India.
ENERGY COOPERATION
Saudi Arabia is a key partner for ensuring India’s energy security and was its third-largest crude and petroleum products source for FY23.
India imported 39.5 million metric tonnes (MMT) of crude from Saudi Arabia in FY23, amounting to 16.7% of India’s total crude imports.
India’s LPG imports from Saudi Arabia stood at 7.85 MMT, and 11.2% of its total petroleum product imports, in FY 23.
DEFENCE PARTNERSHIP
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.
SIGNIFICANCE OF INDIA –SAUDI ARABIA BILATERAL RELATIONS
The bilateral relationship between India and Saudi Arabia carries immense strategic and economic weight. Anchored in a rich history of trade and cultural interactions, this relationship has now matured beyond just an oil-centric dynamic.
Saudi Arabia plays a pivotal role in ensuring India’s energy needs, consistently being a leading supplier of crude oil. Their economic engagement is broadening, underpinned by Saudi Vision 2030, which seeks to diversify its economy and invites opportunities for Indian sectors like IT, defence, and entertainment.
The strengthening of diplomatic ties, evident through frequent high-level exchanges, has deepened their cooperation on regional peace and counter-terrorism. Moreover, the sizable Indian community in Saudi Arabia not only contributes significantly through remittances but also cements cultural linkages.
On the other hand, for Saudi Arabia, India, with its rising global stature, provides a vast market, potential investment avenues, and a stable diplomatic partner in a tumultuous Middle Eastern landscape.
RELEVANCE OF STRATEGIC PARTNERSHIP COUNCIL
Economic: Given the basket of trade between both countries which has seen a significant rise in the past few years the SPC will take the bilateral trade relations to new heights by collaborating in various domains including start-ups, and digital infrastructure development.
The direct investments by Saudi Sovereign Wealth Funds into India, in addition to the current inflow of investments, will also provide the much-required boost to bilateral relations.
Energy: India has targeted to achieve 5 million tonnes (MT) of green hydrogen capacity annually, along with an additional 125 GW of renewable energy capacity by 2030, under the National Green Hydrogen Mission announced in August 2021 as part of the national effort to diversify its energy basket.
In line with its Saudi Vision 2030 programme, it launched (in 2021) the Saudi Green Initiative, which works on increasing Saudi Arabia’s reliance on clean energy, offsetting emissions, and protecting the environment. In light of this, both countries having similar ambitions can usher in a new era of energy diplomacy.
India and Saudi Arabia signed a MoU for energy cooperation in the areas of Renewable Energy, Energy Efficiency, Hydrogen, Electricity and Grid Interconnection between the two countries: Petroleum, Natural Gas, Strategic Petroleum Reserves and Energy Security.
Among the major proposed investments in the West Coast Refinery & Petrochemicals Project in Maharashtra, to be jointly built by Saudi Aramco and an Indian consortium that includes Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation.
Defence: The two sides commended their deepening cooperation and agreed to continue work, including joint exercises training and to consider possibilities of joint development and production of defence equipment.
India’s expansion on defence cooperation with the Gulf is concentrated on securing interests in the realm of trade and energy security. Saudi Arabia’s move towards opening its economy to global investment offers many opportunities for India, especially in the defence technologies sector led by private firms.
Strategic: Saudi Arabia is one of the most important strategic partners of India. As two of the world’s fastest-growing countries, the partnership is important for the stability of the entire region. The recent state visit of the Crown Prince is significant as it comes months after Saudi Arabia ended hostility with Iran through a deal that was negotiated by China. The state visit of the Crown Prince has additional importance as it took place weeks after Saudi Arabia became a member of the BRICS during the Johannesburg summit.
Saudi Arabia has substantial geopolitical influence in the regional politics of the Middle East. The newfound grounds of cooperation between both countries shall bring greater cooperation in other areas of geo-political importance, such as the India-Middle East-Europe Economic Corridor (IMEC), which was unveiled at the G20 Summit in 2023. The robust partnership will also help both nations to come together on regional and international issues of mutual interest, including cooperation at multilateral forums such as the United Nations, G20 and Gulf Cooperation Council (GCC).
CHALLENGES IN THE BILATERAL RELATIONS
Saudi Arabia has engaged with China, reproached Iran and Israel, and is also now consolidating the Saudi partnership with the US, India, and Europe. Riyadh still helps Pakistan with economic aid, even while strategically engaging with New Delhi.
Regional security in West Asia also needs the revival of the Joint Comprehensive Plan of Action (JCPOA). China has affirmed that its role in West Asian affairs is likely to get more active and substantial. This poses challenges for Indian diplomacy.
Given the high number of Indian population employed in Saudi Arabia the Nitaqat program (2011) which seeks to increase the employment of Saudi nationals in the private sector, seems to be a bone of contention between both nations.
THE WAY FORWARD
The I2U2 partnership between India, Israel, the UAE, and the U.S. has already put India on the region’s alliance canvas. The recent developments between India and Saudi Arabia provide a window of opportunity for India to embed itself as a significant player in the Middle East.
The effort to collectively fight terrorism has extended at the bilateral level as the two countries have signed a memorandum of understanding to combat terrorism. Whether it was the Riyadh Declaration (2010) or the recent meeting of the India-Saudi Arabia Strategic Partnership Council, the leaders of the two countries condemnation of terrorism, extremism and violence has only reaffirmed that terrorism is global and threatens all societies. India should continue to strengthen its anti-terrorism stance at the global platforms.
Diversification: The health sector offers significant potential for cooperation between the two countries, such as doctors exchange programmes, medical tourism and building healthcare infrastructure. India is one of the largest manufacturers and exporters of pharmaceuticals and should broaden the scope of bilateral ties with Saudi Arabia in such sectors.
Saudi Arabia imports farm produce worth more than US$ 19 billion a year, but India has only an 11 per cent share in this market. India has already removed the restrictions on the export of organic products and processed products to West Asia. Finding ways to enhance India’s farm exports to Saudi Arabia needs to be explored.
THE CONCLUSION: Both countries are focused on widening the scope of bilateral engagement and can provide the much-needed impetus to each other’s interests, but at the same time, not overlook 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 both countries is to put into action the promising agreements signed between them.
Mains Practice Questions:
1. Despite breaking new ground India-Saudi Arabia relations face significant challenges. Elaborate.
2. The India-Saudi Arabia Strategic Partnership Council serves as a comprehensive platform to foster collaboration across a wide range of sectors. Discuss.
Additional Information
The following eight MoUs were signed/exchanged during the visit
1. MOU in the field of Energy between the Ministry of New and Renewable Energy of India and the Ministry of Energy of Saudi Arabia
2. MOC between the Ministry of Communication and IT of Saudi Arabia and MEITY of India in the field of Digitization and Electronic Manufacturing
3. MOU between CVC of India and Saudi Oversight and Anti-Corruption Authority
4. MOC between the National Archives of India and the King Abdulaziz Foundation of Saudi Arabia in the area of archival cooperation
5. Framework of Cooperation on Enhancing Bilateral Investment between Invest India and the Ministry of Investment of Saudi Arabia
6. MOU between Saudi EXIM Bank and EXIM Bank of India
7. MOU for Cooperation in the Technical Field & Establishment of the Small and Medium Enterprises Bank between SIDBI and SME Bank of Saudi Arabia
8. MOU on Seawater Desalination between National Institute of Technology of India and Saline Water Conversion Corporation of Saudi Arabia
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