Saudi Arabia promises India investments

Saudi Arabia’s Crown Prince Mohammed bin Salman said he expected investment opportunities worth more than $100 billion in India over the next two years. The Crown Prince has just wrapped up his tour of Pakistan and India, signing multiple deals worth billions across both countries. 

Background 

Relations between the two nations are generally strong and close, especially in commercial interests. Indo-Saudi bilateral trade reached US$ 27.48 billion in the financial year 2017–18, up from US$ 25.1 billion in the preceding year. Saudi Arabia's exports to India stood at US$ 22.06 billion whereas India's exports were US$ 5.41 billion.

Since the 1990s, both nations have taken steps to improve ties. Saudi Arabia has supported granting observer status to India in the Organisation of Islamic Cooperation (OIC) and has expanded its collaboration with India to fight Islamic terrorism in the Middle East.

Relations between the two countries have strengthened considerably owing to collaboration in regional affairs and trade. Saudi Arabia is one of the largest suppliers of oil to India, who is one of the top seven trading partners and the fifth biggest investor in Saudi Arabia.

The Saudi Crown Prince, Mohammad bin Salman, made a visit to India during his journey to several Asian countries in February 2019. The Crown Prince met the Indian Prime Minister as well as a number of high officials in India. The main aim of the visit is to improve the historical ties between the two countries.

Analysis 

India rolled out the red carpet for the crown prince as it seeks diplomatic support against Pakistan following a militant attack in the disputed region of Kashmir.

The crown prince, whose country is facing frosty ties with Western countries after the killing of Saudi journalist Jamal Khashoggi, was also given a lavish welcome this week in Pakistan where the two sides signed memoranda of understanding valued at about $20 billion to help prop up Pakistan’s economy.

In a joint press appearance after talks with Indian Prime Minister Narendra Modi, the crown prince said terrorism was a common concern and Saudi Arabia was ready to share intelligence with India to tackle it.

The two countries will start a security dialogue at the level of national security advisors and set up a working group on counter-terrorism, said T.S. Tirumurti, who handles economic relations at India’s foreign ministry.

“Both leaders called on all countries to renounce the use of terrorism as an instrument of state policy,” Tirumurti told a press briefing.

India blames Pakistan for not doing enough to counter militant groups that operate from its soil including the one that claimed responsibility for the Kashmir car bombing. Pakistan denies any involvement in cross-border terrorism and has said it would retaliate against an Indian attack.

“We face similar challenges, chief among them extremism and terrorism … and we reaffirm to India that we are ready to work in the intelligence and political arenas to coordinate our efforts…” the crown prince said.

Saudi Arabia’s domestic security structure helped put down an al Qaeda bombing campaign over a decade ago. But the kingdom continues to face occasional attacks by Sunni Islamic State fighters and Shi’ite militants in its Eastern Province.

On trade relations, the Crown Prince said: “we expect the opportunities we are targeting in India in various fields to exceed $100 billion in the coming two years”. Sectors of interest included energy, infrastructure, agriculture and manufacturing, Tirumurti said, adding that Saudi Arabia’s focus was on expanding non-oil trade with India.

Giant petroleum and natural gas company Saudi Aramco said it was in talks with India’s Reliance Industries Ltd for possible investments and was seeking other opportunities.

Assessment 

Our assessment is that India stands to benefit if the Saudi ’s are able to invest in energy, refineries and financial services.  We believe that’s such investments will fructify if political and economic sentiments are favourable to attract foreign investment. 

Image courtesy: Prime Minister's Office, Government of India (https://commons.wikimedia.org/wiki/File:Prime_Minister_Narendra_Modi_meeting_Mohammad_bin_Salman,_Deputy_Crown_Prince_of_Saudi_Arabia.jpg), „Prime Minister Narendra Modi meeting Mohammad bin Salman, Deputy Crown Prince of Saudi Arabia“, https://creativecommons.org/licenses/by-sa/2.0/legalcode