The importance of Saudi Arabia to India

The importance of Saudi Arabia to India

News: Crown Prince Mohammad Bin Salman stayed back after the G20 Summit for a State Visit, and co-chaired with Modi the first meeting of the India-Saudi Arabia Strategic Partnership Council.

Background:
• 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.

India-Saudi Arabia Strategic Partnership Council:
• It was established in October 2019 and consists of two main committees - one focusing on political, security, social, and cultural aspects, and the other on the economy and investments.
• This council reflects a significant strategic partnership, with India being the fourth country to establish such ties with Saudi Arabia, following the UK, France, and China.

Why is Saudi Arabia important for India?

Old Friends, Strong Ties
• The two countries established diplomatic relations in 1947. The visit of King Abdullah to India in January 2006 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.

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.
• 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.
• India-Middle East-Europe Economic Corridor - This project aims to connect India to Europe through West Asia. Saudi Arabia holds key to success of the project.

Energy Co-operation
• Saudi Arabia is a key partner for ensuring India’s energy security, and was its third largest crude and petroleum products source for FY23.

Defence Partnership
• 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.

Indian Diaspora
• The Indian community in the kingdom is more than 2.4 million strong, widely respected for its contribution to the development of Saudi Arabia.

Cultural linkages
• Hajj pilgrimage and digitization of Hajj processes reflect the significant cultural ties.

The importance of MBS:
• 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.
• 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.