Beyond oil: Momentum in India-Saudi ties could be a gamechanger

The India-Saudi bilateral meet immediately after the G20 summit saw the conclusion of eight major MoUs (involving vigilance, financial regulation and exim banks, desalination technology) and several other minor understandings (ranging from IT, petrochemicals, pharmaceuticals, new “clean” energy technology, manufacturing and defence).

India is Saudi Arabia’s second-largest trading partner; Saudi Arabia is India’s fourth-largest. Trade between the two countries touched $52.75 billion in the 2022-23 fiscal year, and until being displaced by Russia in the last financial year, Saudi Arabia has been India’s largest source of crude imports for nearly a decade ($29 billion in the 2022-23). India has a large number of expatriates based in Saudi Arabia in both the skilled and unskilled sectors, and has been earmarked a quota of 175,000 pilgrims for the annual Hajj.

Needless to say, the core element in Indo-Saudi relations continues to revolve around energy, especially Saudi export of crude oil. India’s reliance on Saudi oil exports dates back to the 1960s, but India used to buy a greater volume of her crude from among the lighter crude that came from the north side of the Persian Gulf (Iraq and Iran) rather than the Arab Gulf states, because Indian refineries were better equipped to handle that variety. It was only with the fall in the volume of Iraqi exports from the 1990s, and then with the 2010 sanctions regime imposed on Iran by the USA, EU and their allies, that India began to proportionately increase her import of Saudi crude.

Riyadh seized this opportunity by investing in the conversion of refinery technology at Jamnagar to suit the crude of the southern side of the Gulf. In 2019, MBS committed further in this direction by promising investment to the tune of $50 billion in another refinery on the Maharashtra coast (with a projected capacity of 1.2 million barrels a day in partnership with Abu Dhabi National Oil Company of UAE) and a petrochemical plant. During the bilateral meet, MBS reaffirmed Saudi commitment to the project which remains stuck up on account of land acquisition issues.

Over and above the energy and petrochemical sector, MBS has reconfirmed Saudi intention of investing another $50 billion and setting up an office for the Saudi Sovereign Wealth Fund in Gujarat International Fin Tech-City.

As a testimony to this reasonably swift improvement of bilateral ties, the Saudi navy was recently found taking exemplary measures for the safe extraction of Indian expatriates caught up in Port Sudan, and MBS himself acknowledged the role Indian expatriates play in the Kingdom. One can say with some degree of conviction that the days when New Delhi’s ties with Riyadh could be hamstrung by Islamabad, impacting directly or indirectly on either, are finally over.

The prospective collaboration of both the countries on the new proposed port and railroad corridor of IMEC is likely to integrate the two countries in a way to the global supply chain that has not happened since the Portuguese discovery of the sea route to India in the 15th century. That and India’s support for the induction of Saudi Arabia as a permanent member of BRICS seems just the kind of game changer Saudi Arabia needs to materialise MBS’s vision of Saudi Arabia 2030, a post-oil economy.

Saudi investment would provide India with a kind of foreign capital that may not be as susceptible to knee-jerk reactions as Western capital often has been. The issue of India’s energy security will also be addressed in a big way. The reciprocity of benefits is likely to make the bonhomie endure over the medium term. As our American friends would (perhaps) say, “we ain’t seen nothin’ yet.”

The writer is professor, Department of History, University of Calcutta