22 Sep India-Saudi Arabia Relations
This article covers “Daily Current Affairs” and the topic details “India-Saudi Arabia Relations”. This topic has relevance in the “International Relations” section of the UPSC CSE exam.
For Prelims:
Various Initiatives involving India and Saudi Arabia
For Mains:
GS2: International Relations
Why in the news?
Saudi Crown Prince Mohammed bin Salman recently visited New Delhi for the G20 Leaders’ Summit and a State Visit.
Diplomatic Relations and Milestones
India and Saudi Arabia established diplomatic relations in 1947. The two countries have enjoyed cordial and friendly relations rooted in their socio-cultural and economic ties that span centuries. Several significant milestones have contributed to strengthening their bilateral relationship:
- Delhi Declaration and Riyadh Declaration:
- In 2006, King Abdullah’s visit to India resulted in the signing of the Delhi Declaration, which was followed by the Riyadh Declaration in 2010. These declarations marked the elevation of bilateral ties to a strategic partnership.
- Visit of Prime Minister Modi:
- Prime Minister Narendra Modi’s visit to Riyadh in 2016 further enhanced cooperation in the political, economic, security, and defence realms.
- His visit was significant as he was conferred with King Abdulaziz Sash, Saudi Arabia’s highest civilian honour, indicating the importance attached to the relationship.
- Crown Prince Mohammed’s Visit:
- Crown Prince Mohammed’s visit to India in 2019 propelled the momentum further. During this visit, Saudi Arabia announced an approximately $100 billion investment in India.
- Multiple agreements and memoranda of understanding (MoUs) were signed in various fields, including the kingdom’s entry into the International Solar Alliance launched by the Indian Prime Minister.
- Strategic Partnership Council:
- During Modi’s visit to Riyadh in October 2019, the Strategic Partnership Council (SPC) Agreement was signed.
- This agreement established a high-level council with subcommittees on Political, Security, Social and Cultural Cooperation, and Economy and Investments.
Key Pillars of the Relationship
- Economic Ties:
- India ranks as the second-largest trading partner of Saudi Arabia, while Saudi Arabia holds the position of being India’s fourth-largest trading partner.
- Bilateral trade reached $52.76 billion in the financial year 2022-23, accounting for 4.53% of India’s total trade.
- Numerous Indian companies, such as L&T, Tata, Wipro, TCS, TCIL, and Shapoorji Pallonji, have established a strong presence in Saudi Arabia, with approximately 2,783 Indian companies registered in the kingdom.
- Saudi Arabia’s direct investments in India amount to $3.15 billion.
- Energy Cooperation:
- Saudi Arabia is crucial for India’s energy security, being its third-largest source of crude and petroleum products.
- In the financial year 2022-23, India imported 39.5 million metric tonnes (MMT) of crude oil from Saudi Arabia, accounting for 16.7% of India’s total crude imports.
- Additionally, Saudi Arabia provided 7.85 MMT of LPG imports to India, constituting 11.2% of its total petroleum product imports.
- Defense Partnership:
- The defence partnership between India and Saudi Arabia has witnessed significant growth in recent years. Both countries cooperate through the bilateral naval exercise called Al Mohed al Hindi.
- Furthermore, they cooperate closely in defence industries, capacity-building, and joint exercises.
- Indian Diaspora:
- The Indian community in Saudi Arabia, consisting of over 2.4 million individuals, is widely respected for contributing to the kingdom’s development. The Indian diaspora serves as a living bridge between the two countries.
- The Saudi government has taken excellent care of the Indian diaspora, supporting their well-being, evacuating stranded Indian nationals, and assisting Indian Hajj and Umrah pilgrims.
Outcomes of Prince Mohammed’s Recent Visit to India
- India-Middle East-Europe Economic Corridor:
- During the G20 Leaders’ Summit in New Delhi, Prince Mohammed of Saudi Arabia, Prime Minister Narendra Modi, and President Joe Biden announced the India-Middle East-Europe Economic Corridor.
- This massive infrastructure project aims to connect India to Europe via West Asia and could rival China’s Belt and Road Initiative.
- 1st Meet of India-Saudi Arabia Strategic Partnership Council:
- Prince Mohammed stayed in India for a State Visit and co-chaired the first meeting of the India-Saudi Arabia Strategic Partnership Council with Prime Minister Modi.
- The two sides signed eight agreements, upgrading their energy partnership to cover renewable, petroleum, and strategic reserves.
- They also established a joint task force for $100 billion in Saudi investment, discussed trading in local currencies, and expedited negotiations for a free trade agreement between India and the Gulf Cooperation Council.
Challenges in Bilateral Ties:
- Energy Security: India’s energy security relies heavily on Saudi Arabia, and any instability in the region or shifts in Saudi Arabia’s oil policies could have significant consequences for India’s energy supply.
- Geopolitical Considerations: India’s diplomatic relations with other Middle Eastern nations, such as Iran, can potentially influence its interactions with Saudi Arabia, adding complexity to the geopolitical landscape.
- Economic Factors: Despite substantial trade volumes and a substantial Indian expatriate population in the Gulf region, cross-border investments between India and the Gulf monarchies have remained minimal for many years. Both nations are actively addressing this challenge.
- Security Challenges: India has exercised caution when considering security partnerships with Gulf states whose security establishments have historically had close ties to Pakistan.
- Strategic Competition: China’s increasing presence and influence in the Gulf region challenge India. China’s Belt and Road Initiative, which includes the construction of ports and infrastructure projects in the Gulf, could potentially impact India’s strategic interests in the region.
Way Ahead for India – Saudi Arabia Relations:
- Cooperation on Global Platforms: Both countries need to continue working together on global platforms, such as the United Nations, G20 Summit, and OPEC, to influence decisions on major international issues.
- Strengthening Economic Relations: This can be accomplished by focusing on sectors beyond energy, especially since Saudi Arabia plans to diversify its economy under its Vision 2030, which presents an opportunity for Indian businesses.
- Expanding Energy Partnership: India should actively participate in the Kingdom’s investment plans in the “downstream sectors” of petroleum and petrochemicals.
- Leveraging Diaspora: India’s diaspora in Saudi Arabia can be instrumental in deepening cultural and people-to-people ties and contribute to mutual understanding and cooperation at societal levels.
Sources: The importance of Saudi Arabia to India
Download plutus ias current affairs eng med 22nd Sep 2023
Q1. With reference to India-Saudi Arabia Ties, consider the following statements:
- Saudi Arabia ranks as India’s fourth-largest trading partner.
- India holds the position of being Saudi Arabia’s second-largest trading partner.
- Both nations collaborate through the bilateral naval exercise known as MALABAR.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 3 only
(d) None
Q2. Consider the following:
- Saudi Arabia is an important partner in the proposed India-Middle East-Europe Economic Corridor.
- Saudi Arabia is a member of the International Solar Alliance.
- India and Saudi Arabia have signed the Strategic Partnership Council (SPC) Agreement at the G20 New Delhi Summit.
How many of the abovementioned statements are correct?
(a) Only one
(b) Only two
(c) All three
(d) None
Q3. Examine the evolution of India-Saudi Arabia relations. Assess the challenges and opportunities in the relationship in the evolving global context.
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