Economic and social reforms have emerged as the focus area in Saudi Arabia under the leadership of King Salman and Crown Prince Mohammed bin Salman

by Muddassir Quamar

Economic and social reforms have emerged as the focus area in Saudi Arabia under the leadership of King Salman and Crown Prince Mohammed bin Salman. It is a response to the aspirations of the Kingdom’s youthful population. The Crown Prince has been pitching for economic diversification along with limited social opening and has unveiled the Vision 2030 program envisaging widespread infrastructure development and capacity building. Despite facing challenges, the leadership remains committed to carry forward and has invited global corporations to be part of Saudi Arabia’s development story. India, a traditional friend of Saudi Arabia, one of the fastest growing economies in the world and a rising power, is seen in Riyadh as a country with potential to contribute in Saudi growth. Likewise, despite its spectacular economic performance, India faces the challenge of a more sustainable and inclusive growth. Therefore, New Delhi too has been looking for international partners to bring investments and reinvigorate the economy and sees Saudi Arabia as a country that can contribute in India’ growth story.

This convergence of interests has brought India and Saudi Arabia closer in the past few years with a significant upsurge in high level bilateral meetings. Prime Minister Modi visited Riyadh in April 2016 and recently met Crown Prince Mohammed bin Salman on the sidelines of the G20 summit in Argentina. In February 2018, External Affairs Minister Sushma Swaraj visited Riyadh to attend the Saudi National Heritage and Cultural Festival “Janadariya” in which India was the Guest of Honour country.

While India and Saudi Arabia have traditionally had friendly relations, under PM Modi the ties have witnessed a significant upsurge, and the focus has shifted to two-way flow of investments and strengthening of security ties. Though this trend was first reflected in the joint statement signed during the 2016 visit of the Prime Minister to Riyadh, the two leaderships had started to utilize other platforms, especially G20 summits and UN General Assembly, for engaging in high level discussions. It was these high level exchanges that gave a new direction to bilateral ties and the outcomes, if not extraordinary, are certainly substantive.

Since April 2016, the FDI inflow from Saudi Arabia to India witnessed nearly a 250 percent increase. India received only US$64.19 million cumulative FDI from the Kingdom between April 2000 and March 2016 and the figure rose to US$144.19 million between April 20116 and June 2018. Simultaneously, energy imports remains the core of bilateral trade and despite diversification of the sources, the Kingdom remains India’s top supplier of oil with nearly 13.5 percent share in 2017-18. Riyadh is forthcoming to help India shore up its strategic oil reserve and is keen to invest in the development and renewable energy sectors. Saudi Aramco along with UAE’s ADNOC have signed a framework agreement in June 2018 with a consortium of three Indian oil companies (IOC, BPCL and HPCL) to develop the Ratnagiri Refinery and Petrochemicals Limited (RRPCL) in Maharashtra at a cost of US$44 billion. Talks are also on for Saudi-backed SoftBank Vision Fund to invest in the solar energy sector. Saudi Basic Industries Corporation (SABIC) has started operations in India through its offices in Gurugram and Bangalore. Likewise, Indian companies such as Larsen & Toubro, Punj Llyod, Tata Consultancy Services and Shapoorji Pallonji have expanded their businesses in the Saudi market in IT, real estate and infrastructure sectors.

New Delhi and Riyadh have strengthened cooperation in the security and defence sectors. Both countries are concerned with threats emanating from global terrorist organisations and are committed to prevent spread of radical ideologies. Thus, areas such as intelligence sharing, cyber security, counter terrorism, combating radicalism, preventing organised crime, money laundering and maritime security have emerged as priority. Interactions between the National Security Councils of the two countries have become a regular feature over the last decade. Additionally, talks on improving defence cooperation and investments in India’s defence manufacturing sector are on the cards. India has also opened up to training Saudi cadets in its well respected military schools.

Considering the current state of India-Saudi relations, the upsurge in engagements is not incidental. Both India and Saudi Arabia are developing G20 economies and are committed to fast and sustainable economic growth. Undoubtedly, both recognise the potentials and are working for its realisation. The upward trajectory in India-Saudi strategic partnership is a result of this recognition and this is expected to be the main agenda of the forthcoming visit of Crown Prince Mohammed bin Salman.