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Modi’s Visit to Saudi Arabia

Prasanta Kumar Pradhan is Associate Fellow at the Institute for Defence Studies and Analyses, New Delhi. Click here for profile
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  • April 06, 2016

    Prime Minister Narendra Modi’s two day visit to Saudi Arabia on April 2-3, 2016 further bolsters India’s engagement with the Kingdom. Saudi Arabia has remained an important partner for India in the Gulf region. Modi’s visit brings the India-Saudi relationship further closer from where it stood when the Delhi Declaration of 2006 and Riyadh Declaration of 2010 were issued. The visit of King Abdullah to India in 2006 and the visit of Prime Minister Manmohan Singh to Saudi Arabia in 2010 had laid strong foundations for the India-Saudi relationship. Modi’s visit, while intending to take the relationship to a new level, has laid emphasis on important issues such as trade, investment, terrorism and strengthening strategic ties. Saudi Minister for Foreign Affairs Adel bin Ahmed Al Jubeir, while visiting India on March 7-8, 2016, had stated that India is a “very important partner” for Saudi Arabia and expressed his desire to broaden bilateral engagement, indicating a growing commonality in how each country perceives the other including as key players in their respective regions.

    In the past, the relationship has been inhibited by a number of historical factors such as the Kashmir issue, Pakistan factor, regional and global politics. In recent decades, with India’s rise as a major player in world politics and economy, Saudi Arabia came to realise the importance of maintaining strong ties with India. India has been a natural choice for an economic and developmental partnership in Saudi Arabia’s efforts to diversify its relationships by engaging various Asian countries.

    Saudi Arabia’s ties with Pakistan and India’s links with Iran have remained two important factors affecting the India-Saudi Arabia relationship. During his recent visit to India, Saudi Foreign Minister Al Jubeir stated that while “India is a strategic partner, Pakistan is a strategic ally and will remain so.” While Riyadh feels uncomfortable with India’s growing relationship with Iran, India expects the Kingdom to restrain its ally, Pakistan, from allowing its territory being used by terrorists targeting India.

    The rise of terrorism has been a concern for both India and Saudi Arabia, especially the surge of terrorism in West Asia and beyond since the outbreak of the Arab Spring. Saudi Arabia has been targeted by the Islamic State (IS) militants operating from neighbouring Iraq and Syria. The IS has also declared its intention to capture Mecca and Medina, thereby throwing a direct challenge to the Kingdom. India is continuously suffering from the menace of terrorism perpetrated by Pakistan. Thus, security cooperation and intelligence sharing have also been an important element of the partnership that the two countries are forging. This has led them to sign agreements on intelligence sharing and terror financing during Modi’s visit.

    As a result of enhanced cooperation in recent years, bilateral trade has significantly increased reaching around USD 40 billion in 2014-15.1 India also intends to further promote bilateral trade and widen its scope particularly in the non-oil sectors. Modi, during his visit to Riyadh, encouraged more investments from Saudi Arabia into India. According to the Sovereign Wealth Fund Institute, Saudi Arabia holds the world’s fourth largest sovereign wealth fund with the present holding standing at USD 632.3 billion.2 India intends to tap into this huge fund by inviting investments from the Kingdom. Saudi investments in India during the last 15 years have totalled only USD 53.37 million,3 which is far below the potential. Both sides signed an agreement to promote investment and Saudi Arabia has shown interest in investing in India’s infrastructure sector.

    Energy still remains a pivotal factor in India-Saudi Arabia relations. Saudi Arabia is the largest oil supplier for India. In 2014-15, it supplied 34.49 million tons of crude oil to India.4 While for Saudi Arabia, India is a long term assured market for its oil, India believes that the strategic energy partnership with Saudi Arabia will help address energy issues for its growing economy. India also believes that strategic energy cooperation with its largest oil supplier will help achieve its objective of maintaining a strategic crude oil reserve of five million metric tons (MMT) to meet any future exigencies. During his visit to Riyadh in 2010, Manmohan Singh had proposed a comprehensive energy partnership between the two countries and moving beyond the buyer-seller relationship. Modi’s visit has further accelerated this movement with the two countries agreeing to deepen ties in energy infrastructure and undertake joint ventures in the energy sector. This is a significant step forward towards building a strategic energy partnership with the Kingdom.

    Since the outbreak of the Arab Spring, the region has been witnessing turmoil, with political uncertainty and the emergence of new security challenges. Saudi Arabia is a major player in regional politics. It has experienced both internal and regional security challenges in the wake of the Arab Spring. Saudi Arabia favours military intervention in countries like Syria and Yemen, while India calls for restraint and resolution of the crises through dialogue. Despite their political differences over regional issues, both countries are building cooperation on issues of mutual interest such as terrorism, piracy, security cooperation, intelligence sharing, etc. Thus, without being seen as interfering in the affairs of the region, Modi has engaged with the Saudi leadership on the issues of mutual concern.

    There is a visible change in India’s priorities in its engagements with Saudi Arabia. Previously bilateral trade and commerce, dominated by energy trade, was the backbone of the relationship. During the last decade, there is an evident shift in India’s approach. India has been trying to move beyond the buyer-seller relationship in the energy sector and laying emphasis on strengthening cooperation in political, security and defence matters. While recent achievements in security and intelligence cooperation have been remarkable, new vistas are also being explored to further strengthen the relationship. Modi’s visit is a reflection of changing India-Saudi Arabia relations.

    Views expressed are of the author and do not necessarily reflect the views of the IDSA or of the Government of India.

    • 1. Export-Import Data Bank, Department of Commerce, Ministry of Commerce and Industry, Government of India.
    • 2. Sovereign Wealth Fund Rankings, Sovereign Wealth Fund Institute, at http://www.swfinstitute.org/sovereign-wealth-fund-rankings/.
    • 3. Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce and Industry, Government of India
    • 4. Export-Import Data Bank, Department of Commerce, Ministry of Commerce and Industry, Government of India.

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