Recently, the Prime Minister of India visited Saudi Arabia to attend the Riyadh Summit, which is the third summit in many years.
Southwest Asian sub-region has been under volatile circumstances, ranging from India-Pakistan tensions to crises in Yemen, Syria and Afghanistan. This geopolitical flux can get aggravated due to rising prices in the oil market.
In spite of this, Riyadh Summit demonstrates maturity and strategic construct in India-Saudi Arabia ties.
Significance of Riyadh Summit
- Mutual understanding on core issues: India and Saudi Arabia acknowledged each other’s core interests.
- Saudi Arabia expressed an understanding of recent Indian actions in Jammu and Kashmir.
- On the other hand, India strongly condemned the various attacks on Saudi civilian facilities.
- For India, the Riyadh Summit acquired added importance as it coincidentally preceded two domestic developments in India, having implication vis-à-vis the countries of West Asia.
- The conversion of the Jammu and Kashmir into two Union Territories.
- The Supreme Court hearing on the Ayodhya dispute.
- Defence cooperation: Bilateral defence, security and anti-terror cooperation has intensified and the first naval exercise is to be held soon.
- Strategic Partnership Council: Setting up of a bilateral Strategic Partnership Council (SPC) is a defining development.
- SPC will be co-chaired by the Indian Prime Minister and the Saudi Crown Prince.
- The SPC would be a permanent bilateral platform, which will also include officials from Foreign, Trade and Industry Ministries, of both countries.
- Given the centralised nature of executive at both ends, SPC can expedite the decision-making process.
- India as an investment destination: At the Future Investment Initiative (FII) forum in Riyadh, Prime Minister of India listed five areas of investment in India i.e. technology and innovation, infrastructure development, human resource development, environment and business-friendly governance.
- Through FII India has invited Saudi Arabia’s companies to invest in India’s energy sector as India has set a target of $100 billion investment in the sector by 2024.
- 12 Memorandum of Understandings (MoUs) on issues related to defence industries, security, air services, renewable energy, medicine products regulation, prevention of narcotics trafficking, and the use of RuPay cards in Saudi Arabia.
Significance of India-Saudi Arabia Relations
- Geostrategic importance: Saudi Arabia is an important pillar in India’s ‘Look West’ policy.
- Through Look West policy, India strives to have good and growing relations with all major nearby regional powers — Iran, Saudi Arabia, UAE, Iraq, Egypt and Israel.
- Saudi Arabia has identified India as one of the eight strategic partners with whom it intends to deepen partnership in areas of political engagement, security, trade and investment, and culture.
- Security cooperation: During Indian PM’s 2016 visit, an MoU on cooperation in the exchange of intelligence related to money laundering and terrorism financing was signed.
- Energy security: Saudi Arabia is crucial for India’s energy security, being a source of 17% or more of crude oil and 32% of LPG requirements of India.
- Trade ties: Bilateral trade between the two countries was the US $27.48 billion during 2017-18, making Saudi Arabia India’s 4th largest trading partner.
- People to people relations: Though the Indian community in Saudi Arabia has come down marginally to 2.6 million, they, nevertheless, are still the largest foreign community and their annual homeward remittances remain steady at $11 billion.
- Earlier in 2019, Saudi Crown Prince Mohammed bin Salman had committed to investing $100 billion in India.
- However, Saudi Arabia’s investment in India, too, remains far below potential (only $229 million, or 0.05% of the total inbound FDI).
- The trade balance between India and Saudi Arabia is highly in favour of Saudi Arabia, and India’s exports are mainly restricted to the agricultural sector.
- Among the potential areas for the next stage of bilateral cooperation could be greater bilateral synergy in Indian infrastructure, agriculture, start-ups, skilling and IT.
- Shifting some labour-intensive establishments from Saudi Arabia to India would serve the respective national priorities by reducing Saudi Arabia’s expatriate population and boosting ‘Make in India’.
- Saudi Arabia has acquired a major stake in $44 billion refinery project in Ratnagiri district in Maharashtra.
- Also, Saudi Arabia’s company Aramco has acquired a 20% share in the Reliance refinery at Jamnagar and it also participates in building India’s Strategic Petroleum Reserves.
- Therefore, India can streamline the regulatory process to expedite investment from Saudi Arabia.
- 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.