India and West Asia: Saudi Arabia

Viewpoint

India and Saudi Arabia share a dynamic relationship based on economic, strategic, cultural, and people-to-people ties.
The ties have grown significantly in recent years, focusing on mutual interests, regional stability, and strategic cooperation.

Areas of Cooperation

Historical Ties
- India and Saudi Arabia have a shared cultural and economic history, with people-to-people exchanges dating back centuries.
- Indian merchants played a key role in trading with the Arabian Peninsula, and ties deepened during the colonial period.
- Diplomatic relations were formally established in 1947, post-India’s independence.
Economic Partnership
- Energy Security:
  - Saudi Arabia is India’s second-largest supplier of crude oil and natural gas. It supplies around 18% of India’s total oil imports.
  - Example: Aramco’s investment in India’s oil sector, with projects like the $44 billion West Coast Refinery in Maharashtra.
- Trade:
  - Bilateral trade exceeds $40 billion, with Saudi Arabia being India’s fourth-largest trading partner.
  - Example: India exports goods like machinery, rice, and textiles to Saudi Arabia, while importing crude oil and petrochemical products.
- Investment:
  - Saudi investments in India have been rising, particularly in infrastructure and technology.
  - Example: Saudi Public Investment Fund’s (PIF) investments in companies like Reliance Jio and future commitments in India’s technology and renewable energy sectors.
Strategic and Defense Cooperation
- Counter-terrorism: Both nations have collaborated on intelligence sharing to combat terrorism and enhance security.
- Joint Military Exercises: In 2021, India and Saudi Arabia conducted their first bilateral naval exercise, “Al-Mohed Al-Hindi.”
- Defense Agreements: India and Saudi Arabia have a Memorandum of Understanding (MoU) for defense cooperation, which includes joint training and cooperation on cyber security and counter-terrorism.
Recent Diplomatic Developments
- Strategic Partnership Council:
  - Established in 2019, this council aims to foster high-level political and economic dialogue.
  - Example: The council is divided into two segments—one focused on politics, security, culture, and society, and the other on economy and investment.
- Vision 2030:
  - India is an important partner for Saudi Arabia’s Vision 2030, which aims to diversify its economy away from oil dependence.
  - Example: Collaboration in renewable energy, particularly in solar power, with India bringing expertise in solar technology and manufacturing.
Regional Stability and Strategic Alignment
- West Asian Affairs: India and Saudi Arabia share concerns over security in the Persian Gulf, especially concerning Iran and Yemen.
- Pakistan Factor: Saudi Arabia maintains close ties with Pakistan, which can impact its relations with India. However, Saudi Arabia has been neutral in Indo-Pakistan conflicts, demonstrating a balanced approach.
- Multilateral Engagements: India and Saudi Arabia coordinate in global forums such as G20, the United Nations, and the Organisation of Islamic Cooperation (OIC), aiming for regional stability.
Cultural and People-to-People Ties
- Indian Diaspora: Over 2.5 million Indians live and work in Saudi Arabia, contributing to its economy.
- Religious Pilgrimages: Saudi Arabia facilitates Hajj and Umrah pilgrimages for Indian Muslims, a major aspect of cultural diplomacy.
- Tourism and Soft Diplomacy: Growing interest in cross-cultural tourism, with Saudi citizens visiting India for tourism and medical purposes.

Challenges

Iran Relations: India has a balancing act in maintaining good relations with both Saudi Arabia and Iran, given regional rivalries.
Pakistan-Saudi Relations: Saudi Arabia’s historic support for Pakistan requires India to navigate diplomatically.
Trade Imbalance: India has a trade deficit with Saudi Arabia due to heavy oil imports.
Saudi’s Growing Ties with China: Saudi Arabia is increasing its economic and strategic ties with China, India’s main geopolitical rival.