Deepening ties with Saudi Arabia, Indian Prime Minister Narendra Modi recently returned from Jeddah, where he co-chaired a meeting of the India-Saudi Strategic Partnership Council with Crown Prince Mohammad bin Salman.
Notably, the visit comes at a time when India may wish to present itself as a suitable manufacturing option to China, which is deluged with US tariffs, and Riyadh needs to diversify its economy due to falling oil prices.
Though India’s outreach to the Gulf is relatively new, New Delhi is rapidly gaining importance.
Signing a framework agreement to jointly establish two new refineries in India, Modi described the Kingdom as “a trusted friend and strategic ally” and highlighted the “limitless potential” of Indo-Saudi ties. Highlighting the India-Middle East-Europe Economic Corridor (IMEC), Modi said that the project was a “key catalyst of commerce, connectivity and growth in the entire region”.
Unable to pick up pace due to regional instability over Israel’s war on Gaza, the IMEC project could ultimately launch India into competition with China and its trade connectivity corridor, the Belt and Road Initiative (BRI). Active Saudi involvement and continued interest are essential for the completion of this trade corridor.
“After the failure of the ARAMCO-Reliance Industries deal, there is to be a fresh effort to restructure downstream refining projects between the two countries,” Dr Theodore Karasik, a non-resident fellow at the Jamestown Foundation in Washington, DC, told The New Arab, noting that the Jeddah visit was a partial success.
But he said that Saudi-Indian defence ties will be “important to watch since Delhi has defence industry agreements also with the UAE” and Riyadh wants to tap the Indian defence industry model to create a larger indigenous defence industry.
Discussing Modi’s visit, Scott Gibbons, a strategic planner and data analyst from North Carolina, told TNA that there was considerable fanfare and it was “certainly positive, even with some minor agreements, but in itself not of great value for India in light of the current breakdown of the post-WWII world order”.
India’s Gulf policy
Soon after the end of the Cold War, New Delhi adopted a ‘Look East’ policy. Then, after the first Modi government took over in May 2014, New Delhi reached out to the Middle East, describing it as a ‘Think West’ policy.
To rise in global stature, New Delhi needed the financial support of Gulf states, and given that India imports 89% of its crude oil, it was welcomed by the region’s energy industry.
Starting with crude oil imports and labour exports, New Delhi had minimal political engagement with their governments initially.
Sending remittances of over $40 billion per year, the more than 8.8 million Indian citizens working in the Gulf countries have helped boost the Indian economy. As Dr Asif Shuja wrote in a report for the Middle East Institute, “Relations between India and the Middle East have long been based on three elements: manpower, remittances and oil”.
At that point, Gibbons said, though the large Indian expat population facilitated New Delhi’s close ties with Gulf states, the relationship had more importance for “Indian domestic interests than for Indian international or geopolitical ambitions”.
But now, with trade amounting to over $162 billion in 2023-24, the Gulf states have become India’s largest trading partner bloc, at 15.8% of India’s total trade, compared to 11.6% with the European Union.
And as the convergence of interests grew, India’s ties with some of the leading Arab states developed into multi-faceted strategic partnerships.
Power trio
As Group of Twenty (G20) states, India, Saudi Arabia, and the UAE share a common bond and similar targets where economic growth, geopolitical influence, and climate change are concerned. Meanwhile, New Delhi established formal strategic partnerships with both countries – Riyadh in 2010 and Abu Dhabi in 2017.
In 2022, New Delhi and Abu Dhabi finalised a Comprehensive Economic Partnership Agreement (CEPA), and since then, India has resumed free trade agreement negotiations with GCC countries, with energy and food security as the main focus.
Due to this interdependence, any changes in the global balance of power will likely push these three countries even closer together.
In Karasik’s opinion, India’s closest relationship in the Gulf is “hard to measure because of political disputes based on Indian families and their interactions with Gulf states”. He said that India looks to the UAE, and vice versa, as a “partnership to develop the IMEEC for near-term logistics, trade, and advanced technologies (AI) transfer”.
For Saudi Arabia, the Indian relationship is important because of energy cooperation, but this activity has been in fits and starts, moving slower perhaps than the bilateral relations between other Gulf States and Delhi.
Karasik added that when speaking about India and the Gulf, “remember that despite being Arab countries, the UAE and Oman are South Asian countries, providing a nexus of interests. Not everything in Indian outreach into the south is smooth because of South Asia’s own volatile politics, and that aspect gets wrapped up in the bilateral relationships, which can affect commerce and politics”.
India’s energy ties
Consistently, the UAE has been India’s largest trading partner and its third-largest partner overall, while the Kingdom of Saudi Arabia comes in at fourth place. In 2019, Riyadh agreed to help New Delhi in establishing emergency oil reserves to protect it from market price volatility and supply disruptions.
Abu Dhabi also contributed to India’s strategic petroleum reserve (SPR) by helping it build its first such facility in Mangalore on the Arabian Sea. Both Saudi Arabia and the UAE are investing in Indian downstream oil and gas projects, such as refineries, to help it meet its growing energy requirements.
While the UAE has become the seventh largest source of foreign direct investment in India at $15.3 billion, Saudi Arabia had invested $3.2 billion by March 2022, and Qatar had invested $1.5 billion.
And the overall ratio of Middle Eastern oil supplies is likely to rise in the years ahead. In a bid to increase its share of natural gas, New Delhi signed a $78 billion agreement with Qatar to extend imports for an additional 20 years, starting in 2028.
Despite a global trend towards the opposite, India announced in 2023 that it plans to increase its oil demand share from 5% of the global market to 11%, becoming one of just a few countries going back to fossil fuels in its energy mix, but this is exactly what has made it indispensable for the Gulf states.
According to Gibbons, the importance of oil has declined for the US and Europe, while it has increased for China and India. He said, though, “there had been some value in relations with the UAE for India before, India’s policy calculation has changed from a limited financial and labour interest to a much broader geopolitical and trade concern, extending to Kenya, Tanzania and even South Africa”.
As per Gibbon, in the current situation, there is no major power in the Indian Ocean to frame and guarantee trade and security, so alliances are being tested. He added that though India has more of a foot in the door in the region than China, it is only early days.
He noted that while China was moving rapidly with relations under the BRI, benefits are now fading, so it is an opportunity for India to strengthen its relations in the region, but “it has little experience with this level of statecraft, and things are moving fast”.
Growing defence ties
Extending maritime security became part of the Indian strategy to guard against crises in the Red Sea or the Strait of Hormuz. Maintaining ties with Gulf navies, India carried out military exercises with the UAE in 2018, Qatar in 2019, and with Bahrain and Saudi Arabia in 2021. In 2024, the Indian army held exercises with both the UAE and Saudi Arabia.
Lately, though, India has been facing challenges due to the outbreak of the Hamas-Israel war and shipping attacks in the Red Sea, directly impacting New Delhi’s energy security and economic growth.
But India remains compelled to continue with its long-standing, time-tested balancing act between the Gulf, Israel, and Iran. These regional tensions are the main setback for the IMEC, but India is maintaining a careful distance.
Sabena Siddiqui is a foreign affairs journalist, lawyer, and geopolitical analyst specialising in modern China, the Belt and Road Initiative, the Middle East, and South Asia.
Follow her on Twitter: @sabena_siddiqi
