Geographical proximity, historical linkages in trade, cultural affinities, and the presence of a large number of Indian expatriates have made Kuwait-India relations an everlasting bond of mutual understanding over the years. India has been a trading partner and educational destination for Kuwaiti people for a long time. What is more, Indian rupee was legal tender in Kuwait until 1961.

As members of the Non Aligned Movement (NAM), both countries share common perceptions on various regional and international issues. Kuwait and India have developed their cooperation through international forums and high-level visits exchanged between leaders of the two sides.

The Agreement on Executive Programme of Cultural Exchanges signed between the two countries during the visit of His Highness Amir of Kuwait Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah to India in 2006 gave a big impetus to cultural relations. There are about a dozen Indian schools in Kuwait affiliated to the Central Board of Secondary Education, New Delhi. They are well established and cater to the needs of the large Indian community residing in Kuwait. There are about 514,373 Indians staying and working in Kuwait and playing a positive role in fostering India-Kuwait relations.

Visit of Amir

Taking the ties between the two countries to a new high, Amir Sheikh Sabah Al-Ahmad Al-Sabah, paid a historic visit to India in year 2006. From India, the most high profile visit to Kuwait was that of Indira Gandhi, then Indian Prime Minister in 1981.

The Kuwaiti leader’s visit did enhance the prospects of Indo-Kuwaiti trade crossing US$3.2 billion by 2010 from the present US$1 billion, according to Associated Chamber of Commerce and Industry of India (ASSOCHAM). Elaborating on the impact of the visit, Kuwaiti Ambassador to India Khalaf Abass Khalaf Al-Foudari said, “The opportunities for investment in Kuwait are very encouraging. There are many sectors having great scope for investment for Kuwaiti investors and others, specifically in oil and petroleum sector.”

PM’s Visit to Kuwait

Indian Prime Minister Dr Manmohan Singh’s visit to Kuwait on 14 June 2006 gave a strong impetus to expand the bilateral relations between the two countries. India attaches high importance to regional relations between the GCC and India, from where India is looking for 70 percent of the country’s oil and gas requirement. The Gulf region has emerged as a major trading partner for India with bilateral trade exceeding US$16 billion since 2004-05. Kuwait is a major crude oil supplier to India and supplied about 11 million metric tonnes during 2006-07.

Over the last 15 years, the Indian economy has opened tremendous opportunity for Kuwaiti investment in the petroleum and infrastructure sectors. The visit of the Indian leader signalled an immediate establishment of the country’s frontier areas like biotechnology, pharmaceuticals, and information technology in Kuwait.

FTA with Kuwait

On the proposal of FTA with Kuwait and the GCC, the Indian Prime Minister noted that the trade agreement would bring new opportunities in trade, investment, services, labour, and manpower development in both countries. Separate institutional frameworks exist for cooperation with each individual GCC country and FTA between India and the GCC can provide additional means to cooperation between India and the individual countries.

Aviation

India and Kuwait have agreed to augment each other’s airline seat capacity to 12,000 per week. India agreed to raise seat capacities of Kuwait Airways and Jazeera Airways to and from India. According to sources in the Indian Aviation Ministry, both sides have agreed to increase capacity entitlements of each side from 8,320 to 12,000 seats per week. It has also been agreed to raise seat capacities, after aviation authorities in both countries concluded negotiations. India also agreed to grant Kuwaiti carriers access to three more Indian cities—Hyderabad, Kolkata and Bangalore.

Positive Outlook

The visit of the Amir of Kuwait to India accelerated the prospects of Indo-Kuwait two-way trade trebling to over US$3.2 billion by 2010, according to the ASSOCHAM. The two-way trade which stood at US$281.17 million in 2001-02, went up to US$430.06 million in 2002-03 before rising to US$713.99 million in 2004-05. According to ASSOCHAM, India’s import of crude and petroleum products from Kuwait will register a substantial hike, and will help Kuwait to significantly offset its current trade imbalance with India.

Indian Corporate Sector

Kuwait offers an open, highly competitive, sophisticated and affluent market for capital and consumer goods and for project exports. In the post liberation period, the bilateral trade between India and Kuwait has steadily increased.

To enhance the development of telecom infrastructure and ICT training, India and Kuwait have agreements on wider cooperation in Information Technology (IT) and Telecommunication sectors. Over the last two decades, particularly since 1992, an MoU has been in effect between the two countries for cooperation in the field of telecommunications. The Telecommunications Consultants India Ltd (TCIL) has handled telecom projects worth about US$100 million.

Southern Petrochemical Industries Corporation (SPIC) was awarded a mechanical maintenance contract for refinery work for around US$40 million. They have also executed many medium projects worth over US$3 million. SPIC has also set up a joint venture with a local company, M/s. National Consulting Bureau for undertaking small and medium contracts in respect of repair and maintenance in the oil and petrochemical sector.

The Engineers India Ltd. (EIL) is very active in the Kuwaiti market. Punj Lloyd executed many repair contracts for storage facilities in various refineries. Several Indian companies have grabbed sub-contracts for different activities in Kuwait. Prominent among them are M/s. Abban Construction Co., who are doing underground piping, M/s. UB Engineering (Vijay Mallya Group) who are in the Sabiya Power Station and M/s. Dodsal who received a sub-contract for construction work at Mina Ahmadi.

Indian Business Council

The Indian Business Council in Kuwait has brought together Indian businessmen and professionals in Kuwait to project their strengths, capabilities and opportunities in Indian economy, including its corporate and private sectors, to Kuwaiti and International business groups.

Established under the patronage of Ambassador of India to Kuwait in the year 2001, its objectives include promoting business, trade, investment and related activities in Kuwait, India and other parts of the world.

Kuwait Keen on India

Kuwait Petroleum Corporation (KPC), the national oil company of Kuwait, is keen to participate in setting up grass root projects in India in the oil and gas sector. According to Saad A Al Shuwaib, Director and CEO of the Kuwaiti oil company, “KPC is exploring opportunities in the refinery and petrochemical activities and Kuwait is committed to developing present business relationship into partnerships in India.”

Murli Deora, India’s Minister for Petroleum told the CEO who visited New Delhi that this was one of the “best times for foreign companies to invest in Indian oil and gas sector projects as in most of the hydrocarbon activities 100 percent foreign direct investment is allowed including refineries, upstream activities etc.”

Three grass root projects are being implemented by Indian national oil companies like Indian Oil Corporation at Paradip in Orissa, by Bharat Petroleum in Bina in Madhya Pradesh, and Hindustan Petroleum at Bhatinda in Punjab.

The Bina and Bhatinda projects are being implemented as joint venture projects with Oman Oil Company and global steel major, Mittal Investments, respectively. Moreover, other projects for setting up refinery and petrochemical complexes by Indian Oil at Panipat, by ONGC at Mangalore and Kakinada, and HPCL at Vishakhapatnam.

Cost Effective

The minister noted that promoting refinery projects in India was very competitive as capital costs in India were low and project consultancy by public sector technology company Engineers India Ltd was of high quality and at competitive cost. India suggested that the Kuwaiti company could also join Indian public sector oil companies in bidding for upcoming offer of exploration blocks under NELP-VII.

Kuwait Beckons

Equally interesting will be the opportunities in Kuwaiti oil and gas sector for Indian gas majors like GAIL, IOC and OVL. The Indian players can do business with Kuwait Petroleum Corporation (KPC). According to industry sources, Kuwait Foreign Petroleum Exploration Company (KUFPEC), the foreign exploration and production wing and a subsidiary of KPC, has expressed interest to jointly participate with IOC in the forthcoming NELP VII. In addition, GAIL and OVL are also looking at options for joint venture participation with KUFPEC in the upstream hydrocarbon sector in Kuwait.

GAIL and OVL are in talks to invest in the upstream segment with KUFPEC in Kuwait. Both companies have showed interest to participate in the hydrocarbon sector of Kuwait. KUFPEC, as an international oil company engaged in the exploration, development and production of crude oil and natural gas outside Kuwait, is active in Africa, the Middle East, Asia, and Australia.