India – Saudi Arabia Relations - 1 | UPSC Mains: International Relations PDF Download

India - Saudi Arabia Bilateral Relations

• India and Saudi Arabia enjoy cordial and friendly relations reflecting the centuries old economic and socio-cultural ties. The establishment of diplomatic relations in 1947 was followed by high-level visits from both sides. King Saud visited India in 1955 and Prime Minister Jawaharlal Nehru visited the Kingdom in 1956. The visit of Prime Minister Indira Gandhi to Saudi Arabia in 1982 further consolidated the bilateral relations.
• The historic visit of King Abdullah to India in 2006 was a watershed moment that resulted in signing of the ‘Delhi Declaration’, imparting a fresh momentum to the bilateral relationship. The reciprocal visit by Prime Minister Dr. Manmohan Singh to Saudi Arabia in 2010 and the ‘Riyadh Declaration’ signed during the visit raised the level of bilateral engagement to a ‘Strategic Partnership’. The visit of the then Crown Prince, His Royal Highness Prince Salman bin Abdulaziz Al-Saud, Deputy Prime Minister and Minister of Defence of the Kingdom of Saudi Arabia (now King) to India in 2014 further deepened the relations between the two countries, particularly in the area of defence cooperation.

• The highly successful visit of Prime Minister Shri. Narendra Modi in April, 2016 captured the spirit of enhanced cooperation in the political, economic, security and defence realms. The conferring of the highest civilian honour on Prime Minister Modi by the Saudi King is an indication of the importance the Kingdom attaches to its relations with India. Further, the ‘State Visit’ honour accorded to the visit of the Saudi Crown Prince Mohammad bin Salman to India in February 2019 took forward this momentum further. During the visit, announcements of Saudi investments in India targeting a value of US $ 100 billion and increase in Hajj quota to 2,00,000 were made.

• On the invitation of His Majesty King Salman, Prime Minister Shri. Narendra Modi paid an official visit to Riyadh from October 28-29, 2019 during which the Strategic Partnership Council (SPC) Agreement was signed, identifying India as one of the Kingdom’s Strategic Partner Countries under ‘Vision 2030’ with a high-level partnership council at the leadership level. Twelve MoUs and Agreements were signed during the visit in the fields of energy, security, combating trafficking of narcotic drugs, defense production, civil aviation, medical products, strategic petroleum reserves, small and medium scale industries, launch of Rupay card, cooperating in training of diplomats, cooperation between stock exchanges etc. PM also delivered a keynote address at the Third Future Investment Initiative Summit during the visit.

• The landmark visits of Prime Minister Shri. Narendra Modi to KSA in 2016 and 2019 and the state visit of Crown Prince HRH Mohammed Bin Salman to India in February, 2019 marked a new and strong chapter in the bilateral relations which culminated in setting up of the Strategic Partnership Council.  The council is to be chaired by the Prime Minister on Indian side and the Crown Prince on Saudi side. The SPC has two pillars:
  (i) Political-Security-Socio-Cultural
  (ii) Economy and Investment.
  Foreign Ministers of the two countries are co-chairs of the first pillar whereas India’s Minister of Commerce & Industry and Saudi Energy Minister are co-chairs of the Economy and Investment pillar. There are a number of Joint Working Groups in different sectors under the two pillars and a number of meetings at official level have taken place between the two sides in the last few months.

Economic & Commercial Relations

• Saudi Arabia is India’s fourth largest trade partner (after China, USA and Japan) and a major source of energy as India imports around 18% of its crude oil requirement and 30 % of its LPG requirement from the Kingdom. In FY 2019-20, bilateral trade was valued at US $33.07 billion. During this period, India’s imports from Saudi Arabia reached US $26.84 billion and exports to Saudi Arabia were worth US$ 6.24 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.

India-Saudi Trade (in US$ billion)

• According to Saudi Arabian General Investment Authority (SAGIA), there are 476 Indian companies registered as joint ventures/100% owned entities worth US$ 1.5 billion in the Kingdom as of March, 2020. These licenses are for projects in diverse sectors such as management and consultancy services, construction projects, telecommunications, information technology, financial services and software development, pharmaceuticals, etc. Major Indian companies and corporate groups such as L&T, TATAs, Wipro, TCS, TCIL, Shapoorji & Pallonji, etc. have established a strong presence in Saudi Arabia. SAGIA is in talks with Indian start-ups such as OYO, Delhivery, Firstcry, Grofers, Policy Bazaar, Paytm to enter the Saudi market.
• Saudi Investments in India (as per DPIIT from April 2000 to Dec 2019):  Saudi Arabia is the 39th largest investor in India with investments amounting to US $315 Million. Major investment groups include ARAMCO, SABIC, ZAMIL, E-holidays, Al Batterjee Group. The Saudi Sovereign Wealth Fund backed Soft Bank’s ‘Vision Fund’ has invested several billion dollars in the Indian Start-ups such as Delhivery, FirstCry, Grofers, Ola, OYO, Paytm and Policy Bazaar.
• Saudi Petrochemical Giant SABIC set up its R&D Centre in Bangalore with an investment of over US $100 million in 2013. Saudi Aramco and UAE’s ADNOC are jointly participating in the development of US $44 billion ‘West Coast Refinery & Petrochemicals Project Limited’ in Maharashtra. Saudi Company Al- Fanar is executing a 300 MW power project in Gujarat. Saudi Aramco signed a MoU with the Mumbai based GumPro to set up a drilling fluids facility in 2018. In August 2019, it was announced that Saudi Aramco plans to acquire 20% share in the Reliance Industries Limited’s Oil and Chemical business at an enterprise value of US $75 billion. Several Saudi Companies have invested in India through their non-Saudi subsidiaries. Saudi Arabia’s sovereign fund PIF (Public Investment Fund) has announced to invest US $1.5 billion in Jio Platforms, India’s leading telecommunication and digital services company. PIF will hold a 2.32% stake in Jio Platforms on a fully diluted basis.