Saudi Arabia- India relations
This is a collection of articles archived for the excellence of their content.
The importance of Saudi Arabia to India
As in 2023
In his book MBS: The Rise to Power of Mohammed bin Salman, journalist Ben Hubbard described the Saudi Crown Prince as “one of the most dynamic and scrutinised leaders in the world…, praised by supporters as a…game-changer and dismissed by foes as a brutal dictator in the making…”.
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.
Prime Minister Modi described Saudi Arabia as one of India’s most important strategic partners.
Old ties, getting stronger
The two countries established diplomatic relations in 1947. 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.
Prime Minister Modi’s visit to Riyadh in April 2016 captured the spirit of enhanced cooperation in the political, economic, security, and defence realms. King Salman conferred on the Prime Minister the kingdom’s highest civilian honour, the King Abdulaziz Sash, indicating the importance Saudi Arabia attached to its relationship with India.
The visit of Crown Prince Mohammed to India in February 2019 took this momentum further. It was announced that the kingdom would invest approximately $100 billion in India, and six MoUs/ Agreements were signed in a range of fields. An agreement was also signed to pave the way for Saudi Arabia to join the International Solar Alliance (ISA) launched by the Prime Minister.
Modi visited Riyadh again in October 2019. The Strategic Partnership Council (SPC) Agreement was signed during the visit, which established a high-level council to steer the Indo-Saudi relationship. The SPC now has separate subcommittees on Political, Security, Social and Cultural Cooperation, and on Economy and Investments. Twelve pacts were signed during the PM’s visit.
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.
The importance of MBS
After being named Prime Minister, a post traditionally held by the King, Crown Prince Mohammed bin Salman has consolidated his power. At age 38, he is Saudi Arabia’s de facto ruler, and has been first in line to succeed his ailing father as King since 2017.
Through his Vision 2030, MBS has positioned himself as Saudi Arabia’s reformer-in-chief. He has ensured significant changes in the country’s ultra-conservative society, where women have got the right to drive, and where cinemas have been opened, foreign tourists are welcomed, and pop stars and high-profile sports matches have been hosted.
But he has a reputation for being ruthless with critics — he has been accused by US intelligence of having ordered the killing of the dissident journalist Jamal Khashoggi in 2018, an allegation that the Saudis have denied. In 2017, Saudi authorities detained about 200 princes and businessmen in Riyadh’s Ritz-Carlton hotel in a sweeping anti-corruption crackdown.
MBS has engaged with China, he is moving towards rapprochement with 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.
India and Saudi Arabia have stressed the importance of strengthening security cooperation in the field of combating terrorism and its financing.
“Both sides emphasized that terrorism, in all its forms, remains one of the gravest threats to humanity. They agreed that there cannot be any justification for any act of terror for any reason whatsoever. They rejected any attempt to link terrorism to any particular race, religion or culture. Both sides called on all States to reject the use of terrorism against other countries, dismantle terrorism infrastructure where it exists and bring perpetrators of terrorism to justice swiftly,” the joint statement said.
The statement also “stressed the importance of achieving security and stability in Afghanistan and forming an inclusive government that represents all spectrums of the Afghan people, and not allowing Afghanistan to be used as a platform or safe haven for terrorist and extremist groups”.
“He is determined to give Saudis a shining, prosperous future, and exercises an unflinching willingness to crush his foes. Combined in different doses, those attributes will likely guide his actions far into the future,” Hubbard wrote. New Delhi is not wasting any opportunity to engage the young Crown Prince.
Indian workers in Saudi Arabia
2017, Sept, Only Few Organisations Get Block Visas
From Sept, Only Few Organisations Will Get Block Visas
Saudi Arabia's revised Nitaqat (or Saudisation) scheme does not bode well for Indian migrants. From September 2017, only a handful of organisations with high grades -based on number of Saudi nationals employed by them and other criteria -will be able to apply for new block visas for migrant employees.
In 2016, there were nearly 25 lakh Indians working in Saudi Arabia, according to a reply in Lok Sabha.
However, migration numbers are declining.There were only 1.65 lakh emigration clearances for Saudi Arabia in 2016, a decline by 46% from 2015. Top origin states in 2016 were Uttar Pradesh, West Bengal and Bihar with Kerala being a distant fourth.
The revised Nitaqat scheme, aimed at increasing employment opportunities for Saudi nationals, will cover private companies with six or more employees (as opposed to current criteria of 10 or more).
Only organisations in the `Platinum' and `High Green' categories will be eligible for new block visas.Construction and hospitality, sectors which have a predominantly blue collar Indian workforce, are unlikely to gain from such rules.
“Others can obtain visas for expat employees only through a transfer of sponsorship. In other words, these organisations will be limited to hiring expat workers who are already in Saudi Arabia and have a work visa with another employer,“ said an immigration alert from EY, a global professional services entity.
“A majority of Indian workers are blue collar workers,“ said an immigration expert.
“Organisations employing them -such as construction contractors or restaurants -are unlikely to fall in platinum and high green category .The added complexity is that workers already employed in companies falling in low categories cannot be transferred from one employer to another.It's currently unclear how employment needs of these sectors will be met in the future,“ he added.
The Nitaqat system was first introduced in mid-2011 to encourage employment of Saudi nationals. Employers are divided into four categories, Platinum, Green (with three sub categories of high, medium and low), Yellow and Red. Those in Platinum have a higher proportion of Saudi nationals as employees (generally 40% or more).
To determine an organisation's Nitaqat category, parameters used include: size and business activity; percentage of Saudi employees and average salary of such employees; retention rate of Saudi employees and percentage of Saudi national employees with high salaries. Highest weightage in computation is given to number of Saudis (ie: locals) employed by an organisation.
Saudi Gazette, an English newspaper, citing the Saudi labour force survey results, wrote the number of non-Saudi employed persons for the first quarter of 2017 reached 108.5 lakh, nearly 78% of the total employed, which is 139 lakh.This report added that majority of foreign workforce comprised of Indians (30 lakh), Pakistanis (25 lakh) and Egyptians (22 lakh).
In recent years, the Saudi government has also begun to introduce some sector-specific rules. For instance, departmental stores can only hire locals and not migrant workers.This step, according to Saudi newspapers, will release 20,000 jobs for the local population.
2020: Saudi ‘snubs’ Pakistan's call for OIC meet on Kashmir
ISLAMABAD: Saudi Arabia is reluctant to accept Pakistan’s request to immediately convene a meeting of the Organisation of Islamic Cooperation’s (OIC) Council of Foreign Ministers (CFM) on Kashmir, a Pakistani daily newspaper, Dawn, reported on Thursday.
Amid Islamabad’s growing unease over failing to garner support for OIC’s CFM meeting, Prime Minister Imran Khan had voiced frustration over the silence of the 57member bloc of Muslim countries on Kashmir while speaking at a thinktank during his recent visit to Malaysia.
“The reason is that we have no voice and there is a total division amongst us. We can’t even come together as a whole on the OIC meeting on Kashmir,” he said.
Pakistan has been pushing for an OIC foreign ministers’ meeting since India revoked the special status of Kashmir in August last year. Underscoring the importance of the CFM meeting, Pakistan foreign minister Shah Mehmood Qureshi had recently said at a press conference that it was needed to send a clear message from the ummah on the Kashmir issue.
For any move at the OIC, support from Riyadh is considered a must given that the body is dominated by Saudi Arabia and other Gulf countries.
The kingdom reportedly made several proposals to Pakistan to avoid the CFM, including holding of a parliamentary forum or conference of speakers from Muslim countries and a joint meeting on the Palestine and Kashmir issues, but Islamabad has stuck to its proposal for a CFM meeting. Following Islamabad’s refusal to attend the Kuala Lumpur summit under Saudi pressure, Riyadh had shown some flexibility on Pakistan’s proposal.
It had sent its foreign minister to thank Pakistan for staying away from the event in Malaysia but that flexibility was short-lived and Riyadh soon reverted to its position on the CFM on Kashmir.
As part of the continuing upward trajectory in military ties with Gulf countries, India is now all set to conduct its first-ever naval exercise — Al Mohed Al Hind — with Saudi Arabia.
INS Kochi, with its two integral Sea King-42B helicopters, arrived at Port Al Jubai during its Persian Gulf deployment. Flag officer commanding India’s western fleet Rear Admiral Ajay Kochhar held discussions with Saudi Eastern Fleet commander Rear Admiral Majid Al Qahtani.
The exercises come shortly after IAF chief Air Chief Marshal R K S Bhadauria visited the UAE and Israel this month to bolster military ties. TNN
Saudi Arabian impact on India’s economy
India wants to see oil prices at about $50 a barrel while Saudi Arabia is said to be aiming for oil near $80 Saudi Aramco, has agreed in principle to join proposed 1.2 million barrel a day refiner - Ratnagiri Refinery & Petrochemicals India imports about 80% of its crude requirements
Oil’s rally to $70 a barrel is threatening to clip India’s economic wings at a time when Saudi Arabia is looking to join a $30 billion refinery project in the world’s fastest growing market.
India wants to see prices at about $50 a barrel in order to manage its finances better, Oil Minister Dharmendra Pradhan said in an interview. Meanwhile, Saudi Arabia -- which is said to be aiming for oil near $80 to pay for its own crowded policy agenda -- is planning to sign a deal to participate in a refinery on India’s west coast as part of its strategy to secure sources of consumption for its crude.
While the Modi government reaped the benefits of the biggest price crash in a generation during its first term in power, oil is recovering as the government gears up for elections in 2019. Saudi Arabia, the world’s biggest crude exporter, is preparing for an initial public offering of its state-run producer and leading efforts by OPEC to curb output and eliminate a global glut that spurred oil’s decline.
“We are a very price-sensitive consumer,’’ Pradhan said on Tuesday. “From Indian consumers’ point of view, I will be more than happy if the price is around $50 a barrel.’’ Saudi Arabian Oil Co., known as Saudi Aramco, has agreed in principle to join a proposed 1.2 million barrel a day refiner on India’s west coast, he added.
Saudi Aramco’s Chief Executive Officer Amin Nasser will sign a memorandum of understanding on Wednesday for the project with RRPC, or Ratnagiri Refinery & Petrochemicals, a consortium consisting of state-run refiners Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation, said a person familiar with the matter who asked not to be identified before an official announcement.
Aramco may take a 50 per cent equity stake in the project and can bring in another strategic investor, the person said. Nobody immediately replied to an email seeking comment sent to Aramco’s press office outside regular business hours.
“Things are on the table, we are discussing with each other,” Pradhan said, referring to Saudi Arabian participation in the project. “It has to be a win-win situation for both. It must be acceptable to them, it must be profitable for me also.’’ He confirmed on Wednesday that a preliminary deal will be signed with Aramco.
Saudi Arabia has been edged out as the top oil supplier to India amid an intensifying race among producers to retain their most-prized markets. India, which imports about 80 per cent of its crude requirements, has been diversifying its sources of oil supply and is seeking more favorable terms from producers in the Middle East.
The potential partnership in India would be an extension of Aramco’s strategy to lock up market share by investing in refineries in Asia, the region that’s driving global oil demand growth. Over the last few years, the Middle East kingdom has committed billions to projects in Malaysia and Indonesia, as well as a new refining and petrochemical plant in China.
Saudi Arabian Energy Minister Khalid Al-Falih is scheduled to speak at the 16th International Energy Forum in New Delhi this week, along with other Middle Eastern countries’ ministers.
New Delhi : The India-Saudi Arabia strategic embrace got tighter on Monday with the two sides focussing on deepening cooperation in energy, trade, defence and security as they signed eight agreements. PM Narendra Modi told visiting crown prince and PM Mohammed bin Salman (MbS) that the relationship between the two fastest growing econo mies is important for regional and global stability, human welfare and prosperity.
After participating in the G20 summit, MbS had stayed back for a state visit on Monday during which the two co untries also announced formation of a taskforce to channel investments into India worth $100 million, which the Saudi government had announced in 2019 and half of which is meant for the upcoming refinery in Maharashtra, backed by Saudi oil giant Aramco. They also elevated their partnership in hydrocarbons to a comprehensive energy partnership.