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Explained: Why the Gulf matters for India

BJP’s action against two of its spokespersons follows outrage from several Gulf countries. India’s relations with these countries have been shaped by energy needs, trade, and remittances from NRIs working there.

Prime Minister Narendra Modi with the Emir of Qatar, Sheikh Tamim Bin Hamad Al Thani, during a visit to the Gulf nation in 2016. (Twitter/@narendramodi)

On Sunday, the ruling BJP suspended its national spokesperson Nupur Sharma and expelled its Delhi spokesperson Naveen Kumar Jindal, following comments they had made about Islam and the Prophet last week. The move came after three countries in the Gulf region had summoned the Indian ambassadors to their nations to register their protest, and demanded a public apology from India.

The BJP’s action against its own leaders underlines the significance of the Gulf region for India. Barring the Jewish state of Israel, the 10 other countries of the Gulf region — Saudi Arabia, Qatar, Iran, Iraq, Bahrain, Kuwait, United Arab Emirates, Oman, Jordan and Yemen — together account for one-fifth of the world’s Muslim population, and are among the strongest voices of the Muslim world.

Why is the region important for India?

India has enjoyed centuries of good relations with countries like Iran, while smaller gas-rich nation Qatar is one of India’s closest allies in the region. India shares good relations with most of the countries in the Gulf.

The two most important reasons for the relationship are oil and gas, and trade. Two additional reasons are the huge number of Indians who work in the Gulf countries, and the remittance they send back home.

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How much trade does India do with countries in this region?

According to India’s embassy in Riyadh, the Gulf Cooperation Council (GCC), which includes UAE, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait, “has emerged as a major trading partner of India” and has “vast potential as India’s investment partner for the future. The GCC’s substantial oil and gas reserves are of utmost importance for India’s energy needs”.

UAE: The UAE was India’s third largest trading partner in 2021-2022, and second largest for both exports ($28 billion) and imports ($45 billion) when these are counted individually. In terms of total trade volume, the UAE ($72.9 billion) was behind the United States ($1.19 trillion) and China ($1.15 trillion). The UAE accounted for 6.6% of India’s total exports and 7.3% of imports in the last financial year, up 68.4% since the previous year when international trade was impacted by the pandemic.

Saudi Arabia: At a total volume of $42.9 billion in 2021-22, Saudi Arabia was India’s fourth largest trading partner. While exports were low at $8.76 billion (2.07% of India’s total exports), imports from Saudi Arabia were the fourth largest at $34.1 billion (7%), up 50% from the previous year. Most of it was crude oil.

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Iraq: It was India’s fifth largest trading partner in 2021-22 at $34.3 billion.

Qatar: The total trade was $15 billion, accounting for just 1.4% of India’s total trade, but the country is India’s most important supplier of natural gas. Vice President M Venkaiah Naidu, who is on a three-day visit to Qatar as the diplomatic row erupted over the weekend, said on Sunday that Qatar accounts for 41% of India’s total natural gas imports. The UAE accounts for another 11%.

How much oil does India import?

According to an analysis by the Observer Research Foundation in April, more than 84% of India’s petroleum demand, which included crude oil and petroleum products, was met with imports. The 239 million tonnes of oil petroleum imports were worth $77 billion, and accounted for nearly one-fifth of the country’s total imports last year.

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India sourced crude oil from 42 countries in 2021-22, up from 27 countries in 2006-07, the ORF noted. However, the “top 20 sources of India’s oil imports consistently accounted for over 95% of India’s oil imports and the top 10 countries accounted for over 80% in the last 15 years”, it said. “The share of Persian Gulf countries in India’s crude imports has remained at around 60% over the last 15 years.”

In 2021-2022, the largest exporter of oil to India was Iraq, whose share has gone up from 9% in 2009-2010 to 22%. Saudi Arabia has accounted for 17-18% of India’s oil imports for over a decade. Kuwait and UAE remain major oil exporters to India. Iran used to be the second largest oil exporter to India in 2009-2010, its share went down to less than 1% in 2020-21, due to US sanctions.

How many Indians work in the Gulf, and how much remittance do they send?

According to Ministry of External Affairs data, more than 13.46 million Indian citizens work abroad. If Persons of Indian Origin (those who have taken up citizenship of other countries, and their descendants) are added, this number goes up to over 32 million.

Counting only the 13.4 million non-resident Indians (NRIs), the Gulf has the largest numbers. The UAE (3.42 million), Saudi Arabia (2.6 million) and Kuwait (1.03 million) together account for over half of all NRIs.

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In terms of remittances from abroad, India was the largest recipient in 2020 at $83.15 billion, according to World Bank data. This was nearly twice the remittances to the next highest recipient, Mexico, at $42.9 billion.

The largest contributor is the huge Indian diaspora in the Gulf. In a bulletin in November 2018, its last on this subject, the Reserve Bank of India said the GCC countries accounted for more than 50% of the total $69 billion remittances received by India in 2016-17. The UAE accounted for 26.9%, Saudi Arabia for 11.6%, Qatar for 6.4%, Kuwait for 5.5% and Oman for 3%. Beyond the GCC, remittances from the US accounted for 22.9%, second only to the UAE.

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What has been the PM’s outreach to these countries?

Since coming to power in 2014, Prime Minister Narendra Modi has kept a special focus on maintaining or enhancing India’s relations with most of the countries in the region. At a rally in December 2019, Modi had said, “Why is Modi given so much support by Muslim countries?… Today, India has the best-ever relations with the Gulf countries in its history.” He said Palestine, Iran, Saudi Arabia, UAE and Jordan have excellent relations with India and Maldives and Bahrain have bestowed their highest civilian honour on him.

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Modi has visited the region several times since 2014. He visited the UAE in 2015, 2018 and 2019, and Abu Dhabi’s crown prince came to India in 2017 and 2018. Modi visited Qatar and Iran in 2016, and Saudi Arabia in 2016 and 2019. In 2018, he went to Jordan, Palestine and Oman besides UAE, and became the first Indian Prime Minister to visit the Palestinian territory of Ramallah. He visited Bahrain in 2019.

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There have been similar reciprocal visits by leaders from these countries during these eight years. Even during the pandemic, Indian and Gulf region leaders maintained regular contact, with Modi speaking to Saudi Arabia’s crown prince, Abu Dhabi’s crown prince, and Qatar’s Emir in March 2020, and the Kuwaiti Prime Minister, and Bahrain’s king in April.

On his trips, Modi has also visited some of the most popular mosques in those countries, including the Sheikh Zayed Grand Mosque in Abu Dhabi in 2015, and the Sultan Qaboos Grand Mosque in Muscat in 2018.

First published on: 07-06-2022 at 04:30:05 am
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