Saudi Arabia Crown Prince Mohammed bin Salman’s state visit to India signifies a desire to strengthen bilateral relations between the two nations, through trade agreements and investments. The fastest-growing economies India and Saudi Arabia aim at doubling bilateral trade, from about US$52 billion at present to US$100 billion in the coming years.
Image Source: PIB
India and the Kingdom of Saudi Arabia are longtime business partners having centuries old trade relations. The two countries have been steadily expanding their bilateral business relations. They engage in continuous interaction and cooperation, including regular exchange of business delegations.
Saudi Arabia’s Crown Prince, Mohammed Bin Salman Bin Abdulaziz Al-Saud, has recently been on a state visit to India following the conclusion of the G20 Summit. Prime Minister Narendra Modi had extensive discussions with Saudi Arabia’s Crown Prince. The talks between the two leaders focused on strengthening bilateral trade and defence relations. They also had a discussion on trade in local currencies.
The two countries have signed eight agreements across various sectors, including energy, digitalization, investment, and grid connectivity. They also committed to strengthening defence and security ties, cooperation in space, semiconductors, technology, transportation, tourism, and culture. In all, about 50 MoUs worth US$3.5 billion have been inked by India and Saudi Arabia.
1. Trade
Both India and Saudi Arabia are among the fastest-growing economies in the world. They look forward to doubling their bilateral trade from about US$ 52 billion at present to US$ 100 billion in the coming years.
Saudi Arabia is India’s second-largest trade partner (after China). During the period 2022-2023, India’s imports from Saudi Arabia reached US $ 42.03 billion, whereas India’s exports to Saudi Arabia were worth US$ 10.72 billion registering an increase of 22.48% over last year.
India’s trade with Saudi Arabia
Source: Department of Commerce, Govt. of India, value in US$ billion
Major exports from India to Saudi Arabia include engineering goods, rice, petroleum products, chemicals, textiles, food products, and ceramic tiles. Whereas, major products imported into India from Saudi Arabia include crude oil, LPG, fertilizers, chemicals, plastic and products thereof etc.
2. Investment
Indian investments in the Kingdom of Saudi Arabia have increased substantially in recent years. In aggregate, investments by India reached US$ 2 Billion. The investment has been across various sectors like management and consultancy services, construction projects, telecommunications, information technology, financial services and software development, pharmaceuticals, etc.
Major Indian companies and corporate groups having a considerable presence in Saudi Arabia include- L&T, TATA, Wipro, TCS, TCIL, Shapoorji & Pallonji, Air India, Go Air, Indigo, and SpiceJet.
Saudi Arabia is the 18th largest investor in India. As of March 2022, investments by Saudi Arabia amounted to US$ 3.14 billion.
Some major investments made by Saudi Arabia include-
Other than PIF, major investment groups from Saudi Arabia include ARAMCO, SABIC, and ZAMIL.
Exploring opportunities to enhance trade and investment
The Union Minister of Commerce and Industry, Food and Public Distribution and Textiles, Shri Piyush Goyal suggested Saudi Arabia to open an office of their Sovereign Wealth Fund in Gujarat International Finance Tech (GIFT) city in Gujarat. Along similar lines, the industry chamber FICCI could set up an office in Riyadh in partnership with Invest India, and the Commerce Ministry to facilitate investments.
During the bilateral talks, he highlighted that India may be helpful in areas like designing, construction, manning and developing business.
The Minister expressed optimism and said, that Saudi Arabian investments in India’s food processing industry can be a great driver of agriculture and food security.
Saudi Arabia has already initiated some investments in agri-sector. It is important to note that as the purchase of agricultural lands in India, by a foreign entity is not allowed, the Saudi Agricultural & Livestock Investment Company (SALIC), owned by the Public Investment Fund (PIF) has acquired stakes in Indian exporter companies. SALIC has taken a minority stake (33%) in LT Foods -an Indian multinational rice brand. A FIEO delegation visited Saudi Arabia in June 2022. During the visit, the Mission organized B2B meetings for them in collaboration with the regional chambers of Riyadh, Jeddah and Dammam.
Notably, the Trade Promotion Council of India (TPCI) delegation visited Riyadh in September 2022 and met with retail chains like Lulu Hypermarkets, Nesto Group, Carrefour, Madina Hypermarkets etc.
Mr Goyal noted that the Pharma sector has immense potential as well. According to him, a greater understanding between the regulatory authorities of Saudi Arabia and India may help the Pharma industries. This would not only facilitate easy access to Indian medicines for the people living in Saudi Arabia but will also encourage Indian Pharma companies to invest in Saudi Arabia.
To leverage India’s expertise in startups, India has proposed a “Startup Bridge” between the two nations and the formation of a Joint Working Group on education and skill development. Saudi Arabia, on its part, will offer both physical and digital space to set up Startup Bridge in Riyadh.
Saudi Arabia may also provide India with more energy security like oil and fertilizer.
During the bilateral talks, the two leaders agreed to accelerate the implementation of the West Coast refinery project in Raigarh, Maharashtra. The project involves investments from Saudi oil giant Aramco, UAE’s Abu Dhabi National Oil Company, and Indian public sector oil firms.
Both sides also decided to establish a Joint Task Force to ‘identify and channelize’ the U$100 billion of Saudi investment. About half of this promised investment (US$ 50 billion) will be allocated to the refinery project. The remaining half of the investment has been assigned to projects like gas grids and optical fibres.
Last year, the Foreign direct investment (FDI) flow from Saudi Arabia to India, was about US$ 4 billion (FDI inflow during the COVID period was about US$ 2.8 billion). It is time to accelerate the investment coming from Saudi Arabia, said the Union Minister.
At the recent G20 leaders’ summit in New Delhi, an ambitious plan to create a modern-day “spice road” (an economic corridor linking India and the Middle East) was unveiled. India and Saudi Arabia, along with the US, the EU, the UAE and others, have come together and launched the initiative to link railways, ports, electricity, data networks and hydrogen pipelines. This corridor will not only connect India and Saudi Arabia but is also expected to promote economic cooperation & digital connectivity between Asia, West Asia and Europe.
India and Saudi Arabia have enjoyed cordial and friendly relations for centuries. A more balanced trade and acceleration in investment would further complement the centuries-old relationship between the two nations.
You must be logged in to post a comment.
Stay ahead in the dynamic world of trade and commerce with India Business & Trade's weekly newsletter.