The relationship between New Delhi and Riyadh has been improving steadily. Saudi Arabia is a critical partner, and India is not wasting any opportunity to engage Crown Prince Mohammed bin Salman, the country’s de facto ruler, and next in line to be King.
Prince Mohammed visited New Delhi over the weekend for the G20 Leaders’ Summit, where he, along with Prime Minister Narendra Modi and President Joe Biden, announced the India-Middle East-Europe Economic Corridor, a massive infrastructure project that would connect India to Europe via West Asia, and could rival China’s Belt and Road Initiative.
MBS stayed back after the Summit for a State Visit, and co-chaired with Modi the first meeting of the India-Saudi Arabia Strategic Partnership Council. The two sides signed eight agreements, including on upgrading their hydrocarbon energy partnership to a comprehensive energy partnership for renewable, petroleum and strategic reserves, and to create a joint task force for $100 billion in Saudi investment. They also discussed the possibility of trading in local currencies, and expediting negotiations for a free trade agreement between India and the Gulf Cooperation Council of which Saudi Arabia is a member.
The two countries established diplomatic relations in 1947, and Indian government officials say they have always enjoyed cordial and friendly relations that reflect their socio-cultural and economic ties going back centuries.
The visit of King Abdullah to India in January 2006 was a watershed moment in the relationship. The royal visit resulted in the signing of the Delhi Declaration, which was followed in 2010 by the Riyadh Declaration that elevated bilateral ties to a strategic partnership.
Pillars of the relationship
For India, there are four key elements of the strategic ties with Saudi Arabia:
1. ECONOMIC TIES
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.
The joint statement issued during MBS’s visit said, “Both sides praised the burgeoning trade ties and noted that bilateral trade has increased to more than US$52 billion in 2022-23, marking a growth of more than 23%.”
As of January 2022, there were 2,783 Indian companies registered as joint ventures/ 100% owned entities with investments worth approximately $2 billion in the kingdom. Indian companies and corporate groups such as L&T, Tata, Wipro, TCS, TCIL, and Shapoorji Pallonji have established a strong presence in Saudi Arabia.
Saudi direct investments in India amounted to $3.15 billion (as of March 2022). Among the major investors are Aramco, SABIC, Zamil, e-holidays, and the Al Batterjee Group. Saudi Arabia’s Public Investment Fund (PIF) has invested in several Indian startups such as Delhivery, FirstCry, Grofers, Ola, OYO, Paytm, and PolicyBazaar through SoftBank Vision Fund.
In June 2020, PIF announced an investment of $1.49 billion (2.32% stake) in Reliance Industries’ Jio Platforms, and in November 2020, an investment of $1.3 billion (2.04% stake) in Reliance Retail Ventures Ltd. In May 2020, Saudi Agricultural and Livestock Investment Company (SALIC) acquired a 29.91% stake in Daawat Foods Ltd with an investment of $17.23 million. In July 2021, PIF invested in India-based healthtech Healthifyme’s $75 million Series C funding round.
Among the major proposed investments is the $44 billion West Coast Refinery & Petrochemicals Project in Maharashtra, which is being jointly built by Saudi Aramco, Abu Dhabi National Oil Company, and an Indian consortium that includes Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation.
2. 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 the country 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.
3. DEFENCE PARTNERSHIP
The defence partnership has witnessed tremendous growth in recent years. Then Army Chief General Manoj Mukund Naravane made a landmark visit to Saudi Arabia in December 2020.
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.
On defence ties, the joint statement said that the two sides commended their deepening cooperation, and agreed to continue work including joint exercises, training and high-level visits, and to “consider possibilities of joint development and production of defence equipment”.
4. INDIANS IN SAUDI
The Indian community in the kingdom is more than 2.4 million strong, widely respected for its contribution to the development of Saudi Arabia, and seen as a living bridge between the two countries. The joint statement said the Indian side thanked the Saudi side for taking excellent care of the Indian diaspora residing in the kingdom, supporting the evacuation of Indian nationals stranded in Sudan through Jeddah under Operation Kaveri, and for facilitating Indian Hajj and Umrah pilgrims.