India is facing a major diplomatic outrage from several Arab countries after two BJP spokespersons made derogatory references to the Prophet Muhammad in their recent statements.
Why are Gulf countries significant to India
Following a diplomatic conflict over disparaging comments, India's trade with Gulf nations has gained importance.
Trade with GCC Nations
The Gulf Cooperation Council (GCC) is a political and economic union of Arab states bordering the Gulf. It was established in 1981 and its 6 members are the United Arab Emirates, Saudi Arabia, Qatar, Oman, Kuwait and Bahrain.
India's trade with the Gulf Cooperation Council (GCC), stood around $90 billion in 2020-21. Millions of Indians live and work in GCC countries, Reuters reported.
Prime Minister Modi in recent years has strengthened economic ties with the energy-rich nations, the top source for the country's fuel imports.
India imports predominately crude oil and natural gas from the Gulf nations and exports pearls, precious and semi-precious stones, metals, imitation jewellery, electrical machinery, iron and steel, and chemicals to these countries.
Besides trade, Gulf nations are host to a sizeable Indian population. Out of about 32 million non-resident Indians (NRIs), nearly half are estimated to be working in Gulf countries.
In terms of remittances from abroad, India was the largest recipient in 2020 at $83.15 billion, according to World Bank data. This was nearly twice the remittances to the next highest recipient, Mexico, at $42.9 billion.
In a bulletin in November 2018, it's last on this subject, the Reserve Bank of India said the GCC countries accounted for more than 50% of the total $69 billion in remittances received by India in 2016-17.
The UAE accounted for 26.9%, Saudi Arabia for 11.6%, Qatar for 6.4%, Kuwait for 5.5% and Oman for 3%. Beyond the GCC, remittances from the US accounted for 22.9%, second only to the UAE.
India and Saudi Arabia share centuries-old economic and socio-cultural ties. The Delhi Declaration (signed in 2006 on the sidelines of H.E. King Abdullah’s visit to India) and the Riyadh Declaration (signed in 2010 during the Prime Ministerial visit) emphasised energy cooperation between our two friendly countries.
The landmark visits of Prime Minister Shri. Narendra Modi to the Kingdom in 2016 and 2019 and the state visit of Crown Prince Mohammad bin Salman to India in February 2019 have marked a new era in bilateral relations, which culminated in the setting up of the Strategic Partnership Council (SPC), co-chaired by the two leaders.
Trade: Saudi Arabia is India’s fourth-largest trade partner (after China, the USA, and the UAE). More than 18% of India’s crude oil imports are sourced from Saudi Arabia.
In FY 2019-20, bilateral trade was valued at US $33.09 billion. During this period, India’s imports from Saudi Arabia reached US $26.84 billion and exports to Saudi Arabia were worth US$ 6.25 billion registering an increase of 12.18% over last year. Total trade with Saudi Arabia accounted for 4.23% of India’s total trade in FY 2019-20.
During FY22 (Apr-Dec), bilateral trade was valued at the US $29.28 billion. During this period, India’s imports from Saudi Arabia were valued at US $22.65 billion, and exports to Saudi Arabia were worth the US $6.63 billion.
|Year||Imports from Saudi Arabia ($ billion)||Exports to Saudi Arabia ($ billion)||Total Trade ($ billion)||% Increase in Total Trade||% Increase in Imports||% increase in Exports|
|Source: Department of Commerce, Govt. of India|
Indian Investments in Saudi Arabia: According to the Ministry of Investment of Saudi Arabia, there are 476 Indian companies, registered as joint ventures/100% owned entities, worth US $1.5 billion in the Kingdom as of March 2020.
Saudi Investments in India: Saudi investments in India, as of March 2021, amounted to US $3.13 billion. Major Saudi investment groups include ARAMCO, SABIC, ZAMIL, E-holidays, and Al Batterjee Group.
In June 2020, Saudi Arabia's Public Investment Fund (PIF) announced a US $1.49 billion (2.32% stake) investment in Reliance Industries’ Jio Platforms, and in November 2020, PIF announced another investment of US $1.3 billion (2.04% stake) in Reliance Retail Ventures Limited.
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. More recently, in July 2021, PIF invested in India-based health tech Healthifyme's $75 million Series C funding round, according to Indian embassy in Riyadh.
Indian Community: There are around 2.6 million members of the Indian community, which is the largest expatriate group in the Kingdom and is well respected for its sense of discipline, as well as its law-abiding and peaceful attitude.
India-Qatar cooperation in diverse sectors has been steadily growing in an excellent framework provided by historically close ties and regular and substantive engagement, including at the highest levels of the two governments.
Trade: India's bilateral trade with Qatar in 2020–21 stood at US $9.21 billion. India’s export to Qatar during 2020–21 was US $1.28 billion, and India’s import from Qatar was US $7.93 billion.
Qatar is the largest supplier of LNG to India, accounting for over 50% of India's global LNG imports. India also imports ethylene, propylene, ammonia, urea, and polyethene from Qatar.
India is among the top three largest export destinations for Qatar (Japan and South Korea being the other two) and is also among the top three sources of Qatar’s imports, along with China and Japan.
There has been a substantial increase in Qatar’s imports from India in the past 2-3 years, facilitated by the opening of direct shipping lines linking Indian ports with Qatar. The increase has been in the area of food products, vegetables, pharmaceuticals, steel products and construction materials.
Indian Investments in Qatar: According to the Qatar Chamber of Commerce and Industry (QCCI), there are over 6,000 big and small Indian companies operating in Qatar. Indian companies are today pursuing collaborations in various sectors like infrastructure, communications and information technology, energy and other areas in Qatar.
According to a statement by the Qatar Financial Centre (QFC), Indian companies from across sectors have been present in Qatar for several years; among them are Larsen & Toubro, Voltas, Shapoorji Pallonji, Wipro, TCS, and Tech Mahindra.
Qatar Investments in India: In January 2019, QIA invested US $200 million through a primary equity issuance in Bharti Airtel’s arm, Airtel Africa Ltd. In July 2019, BYJU’S announced that it had received an investment of US $150 million led by the Qatar Investment Authority (QIA), the sovereign wealth fund of the State of Qatar.
In February 2020, Qatar Investment Authority (QIA) invested about US $450 million for a 25.1% stake in a unit of Adani Transmission Ltd. The deal includes a subordinated debt investment by QIA, according to the filing, which said the two sides have signed a definitive agreement.
Indian Community: According to the Indian embassy in Doha, there are over 700,000 Indian nationals residing in Qatar. They comprise the largest expatriate community in Qatar and are engaged in a wide spectrum of professions, including medicine, engineering, education, finance, banking, business, and media.
India and Kuwait enjoy traditionally warm and friendly relations rooted in history and sustained people-to-people contact. The year 2020–21 marks the 60th anniversary of the establishment of diplomatic relations between the two countries. India has been a natural trading partner of Kuwait and until 1961, the Indian rupee was the legal tender in Kuwait.
Trade: Historically, India-Kuwait relations have always had an important trade dimension. India has consistently been among the top ten trading partners of Kuwait.
It was the 27th largest trading partner of India in the last fiscal. Bilateral trade has jumped to USD 12.3 billion in 2021-22 as compared to USD 6.3 billion in the previous financial year.
Indian Investments in Kuwait: Indian PSUs like TCIL, LIC (International), LIC Housing Finance, New India Assurance Company, Oriental Insurance Company, and Air India Ltd. (Air India and Air India Express) have offices in Kuwait. In recent years, Indian EPC companies, viz. Larsen & Toubro, ShapoorjiPallonji, Punj Lloyd, Simplex Projects, Essar, Kalpataru, etc., were awarded EPC contracts worth over US $6 billion in Kuwait.
Kuwait Investments in India: Kuwaiti investments in India are estimated to be over US $5.5 billion, the majority of which is by Kuwait Investment Authority (KIA), which has invested in companies like GMR Infrastructure Ltd., Interglobe Aviation’s (Indigo Airlines) and Power Grid Corporation of India Ltd.
Indian Community: There are over one million Indian community members residing in Kuwait (the largest expatriate community in Kuwait).
India and the UAE have shared trade links through the centuries. Exports from India started growing gradually over the years with the emergence of the UAE as a unified entity in 1971. The real impetus, however, started after Dubai positioned itself as a regional trading hub in the early 1990s, and at about the same time, the economic liberalisation process started in India.
Trade: India-UAE trade, valued at US $180 million per annum in the 1970s, is today US $59 billion, making the UAE India's third-largest trading partner for the year 2019–20 after China and the US. Moreover, the UAE is the second-largest export destination of India (after the US) with an amount of nearly US $29 billion for the year 2019-20. For the UAE, India is the second-largest trading partner for the year 2019, with an amount of around US $41.43 billion (non-oil trade).
Indian investments in UAE: Investments by Indian companies in UAE would be in excess of US $85 billion. Many Indian companies have set up manufacturing units either as joint ventures or in special economic zones.
Indian companies, including the Taj Group of Hotels, have also invested in the tourism, hospitality, catering, health, retail, and education sectors. Hinduja Group has set up manufacturing units for Ashok Leyland vehicles in Ras-al-Khaimah.
UAE Investments in India: The UAE’s investment in India is estimated to be around US $17–18 billion, of which US 11.67 billion is in the form of FDI, while the remaining is portfolio investment. In terms of FDI, the UAE is the 9th biggest investor in India. The UAE sovereign wealth funds invested over US $4.12 billion in India during FY 2020–21.
Indian Community: Indian expatriate community of approx. 3.5 million (as per International Migrant Stock 2020 released by the Population Division of the UN Department of Economic and Social Affairs (DESA), is reportedly the largest ethnic community in UAE constituting roughly about 30 per cent of the country’s population.
The Sultanate of Oman is a strategic partner of India and an important interlocutor at the Gulf Cooperation Council (GCC), Arab League and Indian Ocean Rim Association (IORA) fora. India and Oman are linked by geography, history, and culture and enjoy warm and cordial relations. Diplomatic relations were established in 1955, and in 2008, the relationship was elevated to a strategic partnership.
Trade: India is among Oman’s top trading partners. India’s exports to Oman in FY 2019-20 stood at US $2,261.81 million. Oman was India’s 35th largest export market in FY 2019–20. India’s imports from Oman in FY 2019-20 were US $3,669.33 million. Oman was India’s 29th largest import source for FY 2019–20.
India was the 3rd largest market for Oman’s crude oil exports for the year 2019 after China and Japan. India was also the 3rd largest market for Oman’s non-oil exports for the year 2019 after the UAE and Saudi Arabia and the 3rd largest source of its imports after the UAE and China.
Indian investments in Oman: According to Oman’s Ministry of Commerce and Industry, there are over 4100 Indian enterprises and establishments in Oman with an estimated investment of US $7.5 billion.
The Oman-India Joint Investment Fund (OIJIF) is a 50-50 Joint Venture between the State Bank of India and the erstwhile State General Reserve Fund (SGRF) of Oman.
Indian Community: There are about 6,24,000 Indians in Oman (February 2021), of which about 4,83,901 are workers and professionals (May 2021). There have been Indian families living in Oman for more than 150-200 years, according to Indian embassy in Muscat.
India and Bahrain have had economic and trade relations for centuries, and these ties were rekindled during the early 1970s oil boom. Relative prosperity and a higher standard of living in Bahrain boosted global imports of goods and services, including from India.
Trade: Two-way commerce with India stood at USD 1.65 billion in 2021-22 as against USD 1 billion in 2020-21.
Indian Investments in Bahrain: There are 23 branches of prominent Indian banks and companies registered in Bahrain and 3,181 Indian joint venture companies are registered in Bahrain. India’s total capital investment into Bahrain between January 2003 & March 2018 has been estimated at approximately US $1.69 billion.
Indian Community: While Bahrain is a small island country both in terms of geography (765 sq. kms) and population (1.4 million), it has been a favourite destination for Indian nationals working as expatriates, which is reflected by the fact that the Indian community in Bahrain constitutes 30% of the total population and is the largest expatriate community in Bahrain.
The Kingdom of Bahrain has been exceptionally friendly to India and Indians. It hosts around 350,000 Indians on its soil, according to Indian embassy in Bahrain.
Besides, India's bilateral trade with Iran aggregated to USD 1.9 billion in 2021-22 as compared to USD 2.1 billion in 2020-21.
Major Indian exports to Iran include rice, tea, sugar, fresh fruits, drugs/pharmaceuticals, man-made staple fibres, electrical machinery, artificial jewellery, etc.