India’s West Asia Policy
- In post cold-war, India has largely balanced its approach to the three poles of influence in the region – Saudi Arabia, Israel, and Iran
- Look West’ policy adopted in 2005.
- Main features of the policy are
- A Secular and Non- Aligned Policy
- Diplomacy at various levels: closer government-to-government (G2G) relations vibrant business-to-business (B2B) and people-to-people (P2P) relationships.
- Move towards India’s Non-Ideological Policy
- Major emphasis on Maritime Diplomacy
- Establishment of a Strategic Partnership Council (SPC) with Saudi Arabia on
- Political, security, culture and society, headed by Foreign Ministers
- Economy and investment, headed by India’s Commerce Minister and Saudi’s Energy Minister
- rejected all forms of interference in the internal affairs of countries. This is seen as Saudi Arabia’s tacit support for India’s decision to revoke the special status of Jammu and Kashmir.
Importance of Saudi Arabia
- Energy Security
- Saudi Arabia is India’s second largest supplier of crude oil (~18% of the total import). India also sources ~32% of its LPG requirements from Saudi Arabia.
- Saudi Arabian oil major ARAMCO partner in Ratnagiri Refinery and Petro-Chemical Project in Maharashtra closer strategic partnership. Also investment in NIIF.
- India’s inability to buy oil from Iran as a result of the United States sanctions, this energy relationship will continue to be vital.
- Bilateral Trade & Investment
- India is 4th largest trading partner of Saudi Arabia and the 4th largest market for Saudi exports
- Bilateral Investment Protection and Promotion Agreement and a Double Taxation Avoidance Agreement in 2006
- Saudi Arabia to invest about $100 billion in India in sectors including petrochemicals, infrastructure and mining.
- India to invest $100 billion in oil and gas infrastructure by 2024 and India is looking for investments from Saudi Arabi
- Saudi Arabia identified India as one of the Kingdom’s 8 Strategic Partner Countries under ‘Vision 2030’
- 2.6 million Indians working in Saudi Arabia.India is the largest recipient of foreign remittances (up to $11 bn annually) from the kingdom
- India Saudi Arabia agreement to launch the RuPay card in Saudi Arabia. It will benefit the 2.6 million Indians in the Gulf Kingdom and also Haj and Umrah pilgrims.
- future investment initiative FII launched by Saudi Arabia to attract investors 2019
- social
- India has the world’s 3rd largest Muslim population two of Islam’s holiest sites (Mecca & Medina), Saudi becomes important in India’s strategic calculus.
- The Hajj Quota Around 7, 00, 000 Indians also visit the Kingdom to perform Umrah every year.
- Strategic and security cooperation
- The Delhi Declaration (2006) cooperation on terrorism while the Riyadh Declaration (2010) est strategic partnership include space and energy cooperation.
- Being one of the major investors, Saudi Arabia can force Pakistan to abandon its anti-India foreign policy.
- Both countries are strengthening cooperation in in counter-terrorism and intelligence-sharing, capacity building and strengthening of cooperation in combating transnational crimes, through the framework of the bilateral security cooperation. Riyadh also extradited several terror suspects to India
- importance of bilateral engagement to promote ways to ensure the security and safety of waterways in the Indian Ocean region and the Gulf region from the threat and dangers that may affect the interests of the two countries
- first-ever joint naval exercises in the first week of March 2020
- Global cooperation
- India and Saudi Arabia been working together within the G20 to reduce inequality and promote sustainable development
- Both sides cooperate in the United Nations Counter-Terrorism Center.
Challenges in India-Saudi Arabia Relations
- Saudi – Pakistan relation: Pakistan is a “historical ally” of the Saudis.
- Ideological support to terrorism: Saudi money of funding Wahhabi Islamic groups around the world
- Saudi-Iran rivalry:destabilizing West Asia and influencing West Asian geopolitics. Considering its economic interests in Iran, India needs to walk on a tightrope balancing relations between the two countries.
- Saudi Arabia’s aggressive foreign policy in West Asia:damage to regional stability, which is India’s most important goal in the region.In Syria, the Saudi support for the rebels role in destabilizing the regime, leading to the rise of the Islamic State. In Yemen, the war creating conditions for radicalism to flourish.
- Bilateral Issues: Restrictive visa & hiring policies, stringent labour laws, lack of human rights & absence of minimum wage provision exploitation of Indian workers.
Way Forward
- As Saudi Arabia attempts to shed its ultra-conservative image and move towards a more open and moderate economy and society alike, India is being seen as a major collaborator and market.
- India needs to continue the balancing act in West Asia that allows it to have good relations with Saudi Arabia, Iran and Israel alike, the three poles of power at loggerheads with each other in the region.
- At the same time, maintaining distance from regional fractures and conflicts would allow India to pursue its economic and geo-strategic aims in the region.
attack was on the oil processing plant at Abqaiq saudi’s second-largest oil field at Khurais, in the Eastern Province north of Riyadh, owned by Saudi Aramco, Saudi Arabia’s state-owned oil company, and it has led to more than halving of its output.
Implications on India
- Adverse impact on economic growth- due to an extended period of high oil prices.
- Widen the current account deficit: A $10 rise in Brent will lift India’s annualised import bill by $15 billion and a 10% rise in oil prices widens India’s current account deficit by 0.4-0.5 per cent of GDP.
- weakening of rupee, which ultimately squeeze the government’s ability to spend on social sector schemes or sops to revive the economy.
- Coupling with Iran Sanctions:trying to cover up for the loss of oil supply from Iran after the United States imposed sanctions.
- Reliability on Saudi Arabia affected: India viewed Saudi Arabia amongst safest suppliers in world. With this sophisticated attack India have now realised that their facilities are vulnerable.
- Other sectors and industries to be impacted: including manufacturing and aviation, and can accelerate inflation. By-products of crude oil are also used in the production of items like plastic and tyres, which may become more expensive.
Implications on World
- Global Oil Volatility- risk premium on Saudi’s oil fields will increase. Saudi Arabia may install new missile shield system across their major oil fields. Increased risk premium and such defence mechanism will result in increase in Global oil prices.
- Further conflict escalation possible- If escalation between government and Houthis as well other radical groups increases, oil supplies and prices will further be affected.
Way Forward
- Focus on diversification of sources
- Harness the existing resources- such as large coal resources.India should apply better technology to coal processing.
- Maintain strategic autonomy- India can also negotiate with US that it should also be allowed to buy Iranian oil as Iran is offering several concessions in terms of credit facility, insurance etc.
- Develop capacity in renewable energy- reduce its dependence on oil and petroleum imports.