India and Saudi Arabia’s common bonds

Events may have overshadowed Narendra Modi’s trip to Jeddah this week – the Indian prime minister was forced to cut his visit short because of an attack in Kashmir – but there was much for him to discuss with his Saudi hosts.

Amid market volatility and the new dispensation from Washington, Saudi Arabia and India – emerging economies with young populations that benefit from global trade and freer movement of people – have much in common.

In the first place, Mohammed bin Salman, the crown prince, is likely to have wanted to hear about the visit to New Delhi of JD Vance, the influential and hawkish US vice president.

Donald Trump is due in Saudi Arabia next month. The trip is likely to involve some attempted strong-arming over oil (suck up the low prices and don’t flood the market) and the Abraham Accords (on no account mention two states). Vance is likely to have views on both.

Modi will also have taken care to receive guarantees that visa curbs imposed on Indians by the Saudi authorities are relaxed, as promised, in June.

Indian nationals are among those from 14 countries whom the kingdom has temporarily banned, ostensibly to curb unauthorised participation in the Hajj.

Visa access is a continuing preoccupation of Indian politicians as they try to find work for the 1 million citizens who enter the job market – or turn 18 – every month.

Saudi Arabia and other Gulf countries are critical to this. There are 2.6 million Indians and people of Indian origin in Saudi Arabia and the kingdom is a major source of foreign exchange to the not-that-dynamic Indian economy. Workers in the kingdom sent back more than $11 billion last year, the fourth-largest source of remittances.

For its part, Saudi Arabia will want to ensure that it maintains – or rebuilds – its share of India’s oil market and that efforts to move into downstream oil and gas are not frustrated. India has been favouring discounted oil from Russia.

Downstream, Aramco is in talks to invest in a planned refinery in the southern state of Andhra Pradesh, alongside Bharat Petroleum Corp, and in another refinery proposed in Gujarat.

Beyond oil, during the visit to Saudi Arabia, Modi told Arab News that India was “working on feasibility studies for electricity grid interconnectivity between India and Saudi Arabia and the wider region”.

India is a favoured destination for Gulf investment. It has accounted for more than half of all deals by Middle Eastern funds in Asia since 2020, my colleague Gavin Gibbon reported last year.

In 2020 the Public Investment Fund invested $1.5 billion in Reliance Jio Platforms, a digital services provider, and $1.15 billion in Reliance Retail, India’s largest retailer.

But outcomes are patchy and access dependent on personal contacts – including with associates of Modi himself. The rollcall of Indian origin businesspeople who have found themselves in trouble with the law around the world is long and unlovely. Aside from their home country, Indian origin businessmen have faced fraud accusations in South Africa, Kenya, Uganda, Zimbabwe, the UAE and the UK.

The UAE’s Emaar, a giant – and successful – property developer, is pulling out of India. And a joint Saudi-UAE $44bn mega-refinery at Ratnagiri, announced in 2018, has yet to break ground.

Last year, a senior executive at Mubadala, the Abu Dhabi sovereign investment vehicle, told a conference how he had to call the Indian ambassador to the UAE and the Emirati ambassador to India to cut through red tape.

And while Trump has come in for criticism for erecting tariff barriers, all Indian governments since independence have chosen to protect services and industries. India’s trade weighted average was 12 percent in 2023, although much higher for agricultural products. Trump now says that New Delhi has agreed to cut tariffs “way down”.

That is an achievement. 

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