Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz al-Saud, King of Saudi Arabia, is the Chief Guest at the Indian Republic Day Parade on 26 January 2006. India attaches immense significance to H.M. King Abdullah’s visit, which marks a trip by a Saudi King to India after more than five decades. The visit will provide an excellent opportunity for India and Saudi Arabia to further explore ways in enhancing cooperation.

India and Saudi Arabia are age-old business partners: their trade relations span tens of centuries. Saudi Arabia has emerged as an extremely important partner country for India because of the obvious role that it plays in India’s energy security—Saudi Arabia meets 25 percent of India’s crude petroleum requirements and the bulk of its petroleum products. Today, bilateral business ties are being steadily expanded and further strengthened by continuous interaction and cooperation, including regular exchange of business delegations, and Indo-Saudi relations reflect the inherent strength and complementarities of the two economies. Its significance lies in the fact that Saudi Arabia is no longer linking its relationship with India to its ties with Pakistan. The various occasions for high-level dialogue on business matters and regular exchange of delegations have established a sound basis for a constructive, mutually beneficial relationship. Besides being a major trade partner, India views Saudi Arabia as an important economic partner for investments, joint ventures, transfer of technology projects, and joint projects in third countries. During the last couple of years, a large number of Indian trade and industry delegations have visited Saudi Arabia to explore opportunities for long-term partnerships and cooperation, including joint ventures. These delegations have received warm and enthusiastic responses from the Saudi business community. Also, in recent times, the number of Saudi businessmen and delegations visiting India has grown substantially with growing interest in emerging business opportunities in resurgent India. Indian and Saudi companies, also, regularly take part in trade fairs in each other’s country. Important recent bilateral visits from India include Indian Petroleum & Natural Gas Minister Mani Shankar Aiyar in March 2005—when he proposed a long-term strategic energy plan for import of refined petroleum rather than crude to boost Saudi and Indian investments in both countries and to ensure a stable market equilibrium—and Indian Finance Minister P. Chidambaram in April 2005 to co-host the 6th session of the Joint Commission for economic, trade, scientific, technical and cultural cooperation (JCM) between India and Saudi Arabia. Saudi Petroleum Minister Ali al-Naimi visited New Delhi in January 2005 to attend the first round table of Asian ministers on regional cooperation in the oil and gas economy.

The arrival of King Abdullah as Chief Guest at the Indian Republic Day Celebration of 2006 is no routine matter: Being invited to be Chief Guest at the annual parade, which takes place in the heart of India’s capital and showcases India’s military might as well as democratic traditions, is considered a measure of the importance India attaches to its relationship with a country. Saudi Arabia remains important to India as home to Mecca and Medina—the holiest of shrines to 150 million Indian Muslims. The Indian diaspora in Saudi Arabia consists of more than 1.5 million Indian passport holders—the largest expatriate community there. Thus, the strengthening of Indo-Saudi ties is, indeed, imperative.

Trade

India is the 4th largest trading partner for Saudi Arabia. Trade with Saudi Arabia is growing at around 15% annually, and the value of two-way trade between the countries exceeded US$6.63 billion in 2003-2004. Saudi Arabia is the 15th largest market in the world for Indian exports and is the destination for more than 1.76% of India’s global exports. On the other hand, Saudi Arabia is the source of 5.5% of India’s global imports. For Saudi Arabia, India is the 4th largest market for its exports, accounting for 5.95% of its global exports. In terms of imports by Saudi Arabia, India ranks 9th, accounting for about 2.96% of Saudi Arabia’s total imports.

Indian Investments in Saudi Arabia

The bilateral investment between the two countries is growing steadily. Since mid-2000, a number of Indian firms have taken advantage of new Saudi laws and established joint venture projects or wholly-owned subsidiaries in the Kingdom. According to Saudi Arabian General Investment Authority (SAGIA), during the last two years, it has issued 82 new licenses to Indian companies for joint ventures or 100 percent owned entities, which are expected to bring in a total investment of US$467.18 million to Saudi Arabia. These licenses are for projects in diverse sectors such as management and consultancy services, construction projects, telecommunications, information technology, pharma-ceuticals, etc. Moreover, several Indian companies have established collaborations with Saudi companies and are working in the Kingdom in the areas of designing, consultancy, financial services, and software development.

Saudi Investments in India

Saudi Arabia is the 22nd largest investor in India with investments during 1991- 2004 amounting to US$228.8 million. There are 49 Indo-Saudi joint ventures or Saudi-owned companies in India, in diverse fields such as paper manufacturing, chemicals, computer software, granite processing, industrial products and machinery, cement, metallurgical industries, etc.

India & Gulf Cooperation Council (GCC)

The GCC is India’s second largest trading partner, averaging about US$12.5 billion trade per annum. Dr Hashim bin Abdullah bin Hashim al-Yamani, Saudi Minister of Commerce and Industry, led a fifty-member Saudi delegation to the first ever GCC-India Industrial Conference in February 2004. The conference ushered in a new era of cooperation between India and the GCC — as an economic bloc — and provided excellent opportunities for businessmen to meet, exchange views, and plan strategies for future economic, commercial, and industrial cooperation to meet the challenges of the 21st century and globalisation. It gave a boost to the already strong relations that exist between GCC States and India, particularly in the field of economic and commercial exchanges. Four areas of priority were identified: trade and investment, technology transfer, information technology, and industrial cooperation for the development of SMEs.

(Source: Indian Embassy, Riyadh.)

 --By Thankachy Vasudevan