Persion Gulf 2014lndio's Relotions with the Region

Edited byP. R. Kumoroswomy

OSnC f HY"yj:"?9"?F.HP.l i "",*i:.u;""*"1

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Library o[ Congress Cataloging-in-Publication Data

Persian Gulf 2014 : India's relations with the region/ edired by P.R. Kumaraswamy.pages cm

Includes bibliographical references and index.1. India Relations-Persian Gulf Region. 2. Persian Gulf Region-Relarions-

India. 3. Persran Gulf States-Polirics and govemment-2lst century. 4. PersianGulf States-Economic conditions-21st century. I. Kumarasrvamv, P. R.

DS326.P436 303,,+B'254053-dc23 2Ol4 201403009I

ISBN: 978-93-5 I5-0077-3 (HB)

The SAGE Team: Rudra Narayan, Alekha Chandra Jena, Anju Saxena andRajinder Kaur

Soudi ArobioMd. Muddossir Quomor

Kev lnformotion_Area: ),149,690 sq km; Population: 27 .3+5,956 (2014 est.)r Native: less than70 per cent; Expats: more than 30 per cent; Youth: 19.3 per centl Popula-tion growth rate: 1.49 per cent; Life expectancy at birth: 7'1.82,vears,

Major population groups: NA, Religious groups: Sunni 80-85 per cent, Shia

l0*15 per cent; GDP: US$927.8 billion; Per capita income: US$3I,300; For-eign trade: US$523.3 billion; Oil reserves: 26'1.6 miilion bbl (2013); Gas

reserves: B.0IB tnllion m3; Ruling family: al-Saud; Ruler: King Abdullah binAbdulaziz al-Saud (since l August 2005); Crown Prince: Pnnce Salman binAbdulaziz a1-Saud (since IB June 2012); National Day 23 September;Defence budget: 10 per cent of GDP; HDI rank: 57, Literacy rate: 86.6 per

cent; UN education index: 0.703; Gender inequaliry index: 0.682; Labourforce: 8.412 million; Unemployment rate: I0.5 per cent; External debt:US$149.4 billion (December 2013); Sovereign wealth fund: US$681.2billion; Infant mortality rate: 14.58 deaths out of 1,000; Last nationalcensus: 2010; Parliament: l5O-member nominated N{aj1is ai-Shura;Last par-liament appointment: 2013; Number of Indians: 2.8 mlllion; Last Indianprime minister to visit: Manmohan Singh, February-March 2010.

Sources: CL{, Ihe World Factbooh, available at: https://wvw.cia.gov,4ibrary/publica-tions/the-world-factbooV; UN Human Development Report, Statistics, available at:

http://hdr.undp.orglen/statistics/: United States Commrssion on Religious Freedom,US Department of State, Annual Report 2013, BneJs on Foreign Relations, Ministry ofExtemal Affarrs, Government of India and Centre lor Arms Control and Proliferation(Washington, D.C.).Nole: All ligures for 20I3.

192 Mo. Muooessrn Qunvar

Qaudr Arabra's unique geostrategic and geo-economic positions make

r-)it an important country ln the Middle East, especially in the Persian

Gulf region. Domestic and reglonal developments in 2013 broughtnewer challenges for Saudr Arabia. Nitaqr"t, the new labour law, became

one o[ the mosl talked about lssues ln Indian media due to its impactupon expatriate workers. Moreover, an interim deal between lran and

P5+1 in November over the decadelong nuclear controversy became an

important concem for Saudi Arabia. Notwithstanding these issues, 2013proved to be another good year for Indo-Saudi bilaterai ties.

DOMESTIC DEVELOPMENTS

Saudi Arabia is going through a significant phase as far as its domestic

srtuation is concerned. It has experienced slowbut sustained sociopoliti-cal transition due to reform initiatives taken by the monarchy in response

to domestic demands and intemational pressures during the last twodecades. Though it witnessed massive economic growth since the oi1

boom of 1970s, it was only in the aftermath of the 1990-9i Kuwaiticnses that one could notice increased political acti\it,v and demands forpolitical opening.l

Some of the earlier decisions began beanng fruits rn 2013 and strength-

ened the ongoing sociopolitical transformation. For exampie, in late 2012

the head of Mutqwwa (Commission for the Promotion of Virtue and Pre-

vention of Vice) was replaced and its powers were curtailed.2 Womenathletes were aliowed to take part in the London O11,rnpic Games.r ln

January, the king announced the 150 members of the slrth Majlis al-

Shura including 30 women, with one of them belng a Shia. This was intune wrth the krng's commitment in September 2011 to reserve 20 per

cent of the seats for women and to allow particlpatlon and voting nghtsfor women in municipal elections scheduled for eariy 2015 Saudi Arabia

has faced intemational criticisms over the condition and status of rvomen

and their continued marginalization in public reaim. However, the situa-

tion has slowly changed and is reflected in public debates dunng the year.

An important propellant was the campaign for women's nght to drive.

The demand is not new but strongly resonated in the afterrnath of the

Arab Spring. Manal a1-Sharif led the campaign in 2011 but it was curbed

SoudiArobio '193

and she was arrested. A new campaign was started in late 2013 with the

heip of social media

Though the women campaigns for driving nghts have not succeeded,

they have generated debates in local medla about women's rights issues.

Women belongrng to different professions have voiced their opinion for

thelr nghts while some took up social media activism to raise their con-

cems. For example, Eman al-Nafian, a female blogger based in Riyadh,

launched the )6 October Women DrirT ng Campaign through sociai

media. She was joined by Loujain a1-Hathloul, a Saudi currently studpng

in Canada. who volunteered to announce the begrnni.ng of the campalgn

through Keek.* However, as it gathered momentum, it evoked official

crackdown leadrng to arrest of some of the participants including Tariq

al-Mubarak, a schoolteacher, who had openly come out in support ol the

campaign 5 Moreol,er, prominent women, such as Samar Fatany (.1ouma1-

ist and writer), Amira Kashgary (professor), Surrava al-Obaid (member

of Majlis al-Shura), Narla Attar (founder o{ Baladi rnitiative), Suhaila Zain

al-Abideen (member of National Societl' for Human Rights) and Omatn-ra

a1-Na.;.1ar (biogger and actlr.ist), have openlv talked abor,rt u'omen's nghls

and needs for reform.

A number o[ relorm inittatires \\'ere seen durrng the ve:r under

review and can be termed as a limited response to nsing voices in favour

of grantrng women more rights. Apart from nomination of u-omen in

the Mailrs al-Shura, women har,,e now been allou,'ed to practice 1aw.

Bayan Mahmoud al-Zahran was issued a licence to practice larv in courts

in November 2013, thereby becoming the first Saudl rvoman larwer,t'

Efforts are continuing to improve female particlpation in educatron and

economy. Nitdqdt,launched to iimit the number ol expatnate rn'orkers, is

expected to improve the employ.rnent opportunlties lor Saudis. both men

and w-omen, particularly in the private sector. The govemment plans

to improve the network of school, colleges and vocational institutes to

improve the education sector while seeking to diversify the economy to

reduce youth unemplo),rnent. lt has continued to pror''ide scholarship

for students who wish to study abroad through the Kng,\bdullah Foreign

S ch ol ar ship P r o gr amm e.

While reform initiatives were started, some steps have been taken to

crrrh dissent. Prosecution and conviction of some of the actlvists reflect

the Saudi uneasiness over the Arab Spnng. In March 2013, human rights

194 Mo. MuoonssrR QuAMAR

activists Abdullah a1-Hamid and Muhammad al-Qahtani were convicredon a number of charges including disruption of security and incite-ment by the Criminal Court in Riyadh.T The Saudi Civil and political

Rights Association (ACPRA) that was engaged in pror,rding assisranceto detai.nees held without charges or trlal, founded by these two acrlv-ists, was ordered to disband.s This was followed by the conviction oftwo Shia women rlghts actlvists-Wajeha al-Huweider and Fawzia al-Oyouni-on charges of 'undermining a marriage' by the District Courtin Al-Khobar.e The conviction evoked criticisms from other actil'1sts,especially Manal al-sharif who said in her blog that 'it was a sad daynot only for the two activists but for all Saudl women'.1o Many in theinternational media argued that the two have been targeted under a faisecase because of their human rights activities.ll In September, the AppealCourt in Dammam confirmed their conviction.r2 Saudi Arabia has longfaced cnticisms over its human rights tiolations and, hence, these con-Yictions are not very helpful.

Moreover, the institutionalized blas against the Shlas continues.Although King Abduliah has taken some sreps to mitigate the situationby allowing some religious freedom to the Shias, discriminatory pracriceshave not ended. In the wake of Arab Spring some of tlie Shia-dominaredareas, particularly in the Eastem Pror-ince, have witnessed disturbancesbut were brought under control 1r In 2012, a number of Shra youth wereheld on charges of orgamzing demonstration and crearing trouble. Thesrtuation, however, improved in 2013 but demands for release of thosewho are held for long wrthout trial echoed throughout the year.r+

In addition ro these issues, succession remarns an important politicaimatter that resonared dunng 2013. On 14 Febmary, pnnce Khalicl binBandar (b. 1951) was appointed Govemor of Riyadh.15 Interestingiy, thesame day Pnnce Muhammad bin Saad (b. 1944) was replaced with prince

Turki (b. 1971), son of King Abdul1ah, as Deputy Govemor of Rryadh. InApnl, Prince Khalid bin Sultan (b. 1949) was removed as Deputy Minisrerof Defence and was repiaced by pnnce Fahd bin Abduliah bin Mtihammadbut he was removed within 20 weeks and prince Salman bin Sultan(b. 1976) was appointed Deputy Mintster of Defence in August. Mean-while, rn May Prince Mutaib (b. 1952), rhird son of King Abduilah, waselevated to the Council of Ministers as a new Mini.strv of National Guard

Soudi Arobio I ?5

that was created by aboiishing the office of Commander of National

Guard. In December, the Governor of Mecca Prince Khalid al-Faisal

(b. 19'10) was appointed Minister of Education, replacing the king's son-

in-1aw Faisal bin Abdullah bin Mohammed al-Saud who held the posi-

tion since 2009. Prince Mishaal bin Abdullah (b. 1970) was appolnted

the Governor o[ Mecca in December. These shuffling in govemment

positions are important indicators of politics within the Royal family and

may have come as a result of tensions over succession issue

At the foreign policy front, two important developments took place

towards the end of 2013. On 18 October, Saudi Arabia shocked the

world by relectlng a non-perrnanent seat in the United Nations Security

Council (UNSC) for which it was elected for the first time. The offi-

clal Saudi statement sard that it did not wish to accept the seat because

the Security Council has 'failed in upholding its duties towards world

peace', alleging that its 'double standards pushed the kingdom to take

this stand'.16 It was perhaps a reflectlon of Saudi unhappiness with the

US policy towards S1'na and lran.17 The issue attracted widespread dis-

cussions ln the 1ocal media which was appreciatlve of the Saudi stand.r'

Moreol,er, Saudi apprehensions became tme when in November, the

P5+I and lran announced that they have agreed on an interim deal to

resolve the long-standing Iranian nuclear crlsis. Apart from the strong

reaction from the Saudi govemment, the deal attracted criticism in the

Iocal Arabic media lndrcating deep-seated Saudi concem over lranian

ambitions in the region.le

Notwithstanding these developments, the Saudi economy continued

to remain buoyant throughout 2013. The gross domestic product (GDP)

recorded a mild growth to reach US$745 bilhon desplte a decline in oil

revenues by about 11 per cent.20 Revenues from non-oil sector shor'ved

goocl signs with 14 per cent increase representing l0 per cent of total

fiscal revenues. An important aspect of the economic performance was

the 5.5 per cent growth in private sector (non-oi-1), represented malnly

in construclion, retail, transport, communication and manufacturing

sector.21 It was a result of a planned effort towards economic diversifi-

cation to counter the effect of fluctuations in lnternational oil market.

Saudi Arabia is tqnng to diversi.fy lts economy particuiarly in the areas

of power generation, telecommunication, natural gas exploration and

196 Mo. Muooessrn Quer,aan

petrochemical sector almed at lowering dependence on oi1 revenues.Most of the non-oil secrors recorded good growth during 2013.

As per preliminary estimates, the government revenues are pro-jected at US$301.6 billion for 2013 with expenditures projected toreach US$2,16.7 bi11ion, leading ro a US$54.9 billion surplus.:r Thebudget for 2014 is esrimated to be balanced lvirh both rer.,enues andexpenditures projected ar US$228 bi11ion. Human resource der.elop-ment through education and training has been a prtoriry area as far as

fiscal budget is concerned dunng the past five,vears. The,vear 2013witnessed an estimated 25 per cent budgetary expenditure on educa-tion sector, including foundation of new schools, colleges and voca-tional institutions.2r Moreover, 16 per cent of the budget was spent onhealth and social affairs. Similarly, rhe 2014 budger focuses on educa-tlon and health sectors with nearly 50 per cent planned allocation.2+ Asa r,vhole, the government plans to invest in areas that wouid enhance'long-Lerm strong and susLainable economic development and emplo,v-ment opportunities' for citlzens.25 It outiines education, health, ser-vices, infrastructure and science and technology as priority areas forgovernment expenditure.

An important concern that Saudi Arabia is trlnng ..o addtess has ,oeen

unemplolrmsnt among youth. Unemplopnenl rate \,vas estimated to be12 per cent in 2013 but was recorded to be higher amcng \\,omet1 ar 34per cent.26 The rate, hower.er, is higher among vourh both male andfemale, mth estimates ranging up to 40 Der cenr rn 2013. InternationalMonetary Fund (IMF) argues thar since Saudi economv has shor,r,n robustgrowth in the recent years and is expecred to remain strong in 2Lr13-14.it pror.ides a good opportr-rnity to tackle unemployment among )roLlrh.r,The government has taken a number of measures to generate jobs andimprove empiol-ment opporrunities for Saudi nationals. Nitaqaf is oneof the steps 1n rhls direction that aims at hmitrng the number of expa-tnate workers in priYate sector. N{oreor.er, it arms at enhancing theshare of private sector in economy to reduce dependence on oil andimprove employment opporrunittes. Simultaneousl1,, plans have beenlard down to enhance employability and skill der,elopment througheducation and training ol youth to reduce unemployment. Further-nrore, in 2011, the governmenr had launchecl an unemplclnnent allow-ance plan-Hafiz-that continued during 2013.

SoudiArobio 197

The domestic srtuation in Saudi Arabra remained calm and srable

dr"rring 2013 unlike the preuous year when some disturbances were

reported. Overa1l, social, political and economic developments indicate aslow transformation which is steered by the monarchy and is endorsed

by the populace.

BILATERAL RELATIONS

Despite millennla of commercial and civilizational linkages berween

the subcontinent and the peninsula, India's relations with Saudi Arabiaremained confined to diplomatic ties after the British withdrawal. As the

two charLed differenL foreign policy courses, their paths seldom rnter-sected until the 1990s. The penod between 1947 and 1990 wltnessed

occasional high-level lriendly visits but Cid not lead to close relations.28

Trade remained Limited and people-to-peopie contacts were primarllyconfined to Hajj pilgrimage. The situation changed to some extent in rhe

aftermath of oi1 boom due to large inflow of lndian expatriate workersrvho eamed goodwill for themselves and their country with rheir skillsand hard work. The dy,namics changed with rhe changing posr-ColdWar global order as both sides started to realign their international rela-

tions. Economy became the catalyst for a measured break from the past

leading to enhanced relalions and willingness lor straregic eooperariondue [o concurring interests and concems.

The 2006 visit of Krng Abdullah to India and Prlme MinlsrerManmohan Singh's visit to Sar,rdi Arabta in 2010 paved the way forcxpansion of bilateral relatlons in the lzrst five years.2e The year 2012witnessed major breakthrough in the field of defence cooperation wirhthe lrsit of lndian Defence Minister, joint meeting and exrraditions ofLerror accused to India. Moreover, trade volume increased with SaudiArabia agreeing to export more petroleum to compensate the loss due tosanc[ions on ]ran. Efforts from prit ate and govemment organizatrons on

both sides continuecl to explore business and invesrmenr opportunitiesreaching fruition at t-imes. A smooth Haj; with large lndian consignmentand continuous outflow of Indian workers and professionals togetherwith promising trade and business expansion marked the deepening ofbilateral tres rn 2012,

198 Mo. Muooessre Quruec

Politicol Relotions

As a result of recognition of each other's importance and their domina-tion to improve bilateral relations, India and Saudi Arabia recognizedthe need for hlghJevel political exchanges. Apart from the visits of KingAbdullah (2006) and Prime Minister Manmohan Singh (2010), the lastfive years have witnessed numerous bilateral visrts.

From the Indian side, the vi.sits included those by Extemal AffairsMrnister S. M. Krishna in March 201I and Minrster of Defence A. KAntony in February 2012. Moreover, Minisrer of Overseas Indian AffairsYayalar Rar,,r and Petroleum Minister S. Jaipal Reddy had visited SaudiArabia in Se ptember 20 10 and February 20 I 1 , respectlvely. Ministers ofState for Extemal Affairs E. Ahamed (Apnl 2009 and 20I1) and ShashiTharoor (March 2010) visited the Kingdom Chairperson of Hajj Com-mlttee of india Mohslna Kidwai (March 2011) and National SecurityAdvisor Shivshankar Menon (December 2011) r'isired Saudi Arabia todischarge official duties. Furthermore, Deputy Chairman of Rajya SabhaK. Rahman Khan visited Saudi Arabia to attend rhe G-20 parliament

Speaker's Consultative Meeting in Riyadh during 25-26 February 2Ol2and held meetings with various Saudi leaders. Minister of Health andFamrly Welfare Ghulam Nabi Azad represenred India at the funeral ofCrown Prince Sultan in October 2011, while N{rnister of Law andJusticeSalman Khurshid led a three-member delegarion in June 2012 to offercondolences on the demise of Crown Prince Nayef.

Some of the important visits from rhe Saudr side included the usrt oflhen Govemor of Riyadh Prince Salman (Crou,n Pnnce since June 2012)in April 2010. Earlier, Intelligence Chief and now Second Deputy pnme

Minister Prince Muqrin had come ro India in January 2009. AbdullaZainal Alireza. Minister of Commerce, had visited India in Augpst 2009and November 2010 to expiore opportunities for enhancing bilateraltrade and commerce. Other visits include Minister for Economy and pian-

ning Khalid bin Muhammad al-Qusaibi's (February 2011); prince Bandarbin Sultan, Secretary General of Saudi National Secunrl. Councll (L,larch

2011); Tawfiq Bin Fau,zan a1-Rabiah, Minisrer of Comrnerce and lndusrry

$anuary 2012) and Deputy Minister of Petroieum and Mineral ResourcesAbdulaziz bin Salman al-Saud (February 2012).

The high potnt of pohtical relations in 2013 was rhe visit of ExternalAffairs Minister Salman Khurshid during 25-26 lv{ay.ro This was his

SoudiArobio 199

first visit to the region after taking charge of the ministry during whichhe met Crown Prince Salman, Second Deputy Prime Minister Prince

Muqrin, Foreign Minister Prince Saud al-Faisal and Labour Minister

Adel Fakeih.31 He also delivered a personal letter from the Indian Prime

Minister to Klng Abdullah and discussed various domestic, regional and

intemational issues pertaining to Indo-Saudi relations. The principalfocus of this visit, however, was the issue of Nitaqat and India thanked

Saudi Arabia for allowing a grace period for Indian expatriate workers

to correct their status or retum without pa)ang the pena1ty.3z The issue

of turmoil in Spra and concems over Iranian nuclear programme also

came in for discussion. Salman Khurshid, during the joint press con-

ference with the Saudi Foreign Minister, expressed satisfaction at the

progress of lndo-Saudr defence and security tres emphasizing that terroris a common enemy for both the countries and that the stability and

security in the Gulf and South Asia are mutua11,u: interlinked.I Moreover,

he highlighted the Indian willingness to enhance the aiready flounshing

trade relations and inr,rted more Saudl investments in India. He furtherargued that people-to-people contacts could enhance through educa-

tional cooperation and youth exchange programmes.

In addltion, Minister of State for Extemai Affairs E. Ahamed visited

Saudi Arabia with members of Hajj delegation and met Bandar binMohammed al-Hajjar, Saudi Minister of Hajj, in Jeddah and signed the

Hajj agreement for 2013.ra Minister of Overseas Indian Affairs Vayalar Ravr

rrsited Saudi Arabia on274A April and was accompanied by E. Ahamed

and T. K. A. Nair, Advisor to Prime Minister, and held meetings withSaudi leaders including Foreign Minister. Labour N4inister and DeputyInterior Mlnister. Other r.rslts included Attome; General G. E. Vahanvati's

visit during 14-21 May when he met Inierior N,linister Pnnce Muhammad

bin Nayef and Justice Minister Nlohammed brn Abdulkareem al-Issa. On3 July, Rajiv Mehrishi, Secretary in the Ministry of Or,erseas Indian Affairs(MOIA), visited the kingdom and held meetlngs with Saudi Vice LabourMinister Mufraj al-Haqbani and in August Ashok Kantha, Secretary

(East), Mrmstry of External Aflairs (MEA) r,isited Saudi Arabia to review

the arrangements for Ha;.1.]5 Finance Minister P. Chrdambaram visited

Saudi Arabia to attend the India-Saudi Arabia Joint Commission Meeting

held in Riyadh during 27-28lamary 201416 while Crown Prince Salman

was slated to visit lndia in Februan, 2Al+.37

200 Mo. Muoonssrn Qu,quen

From the Saudi side, important polltical visits included Saudi DeputyMinisrer oI Labour Ahmad Bin Fahad al-Fuhaid's ro parricipare in a rr.r o-

day meeting of Joint Working Group (JWG) on Labour issues berweenIndia and Saudi Arabia during 30*31 May. On the sidelines of the JWGmeetirlg, he met Minister of Overseas Indran Affairs Yayalar Ravi.3E InNovember, Saudi Deputy Minister for Law Fahad Abuhimed i,rsitedindia for the Second Review Meeting ol the mnrh Joint Commrttee heldin New Delhi. As a srgn of deepening relations, a labour cooperation pactwas signed between lndia and Saudi Arabia.re

Economic Relotions

Trade and commerce are important areas of bilateral relations betweenIndia and Saudr Arabia. Two-way trade has constantly recorded growthsduring the past five years except for a minor decline during 2009-10.Saudi Arabia is the fourth largest trading partner of India and is sec-

ond only to United Arab Emirates (UAE) ln rhe Persian Guif, which has

emerged as the largest regional trading partner lbr India. The total tradebetween India and Saudi Arabia has recorded a growrh of 16.75 per cenrduring 2012-L3 in comparlson to 2011-12 (Table 8.1 and Figure 8.1).Biiateral trade now comprises 5.53 per cent of India's total foreign rrade.

Trade balance remains skew-ed in lavour of Saudi Arabia owing mainlyto hydrocarbon imports rhat comprise nearly 90 per cent of india's total

Ioble 8.I/ndio-Soudi Arobio BiloterolTrode (in US$ Millton)

2009-10 2A10-11 2011-12 2012-13

lndia's exports toSaudi Arabia

3,907.00 4.68140 5,683.29 9,785.78

india's imports from 17,097.57 20,385.28 31,817.70 33,998.I1Saudi Arabia

Total bilateral trade 21 .004.57 25,069.68 37,500.99 ,13,783.8q

Share of Saudi Arabia ,+.50 4.04 4.72 5.53in India's totai trade

-Sourr:e: Adapted from Directorate General oI Foreign Trade, New Delhi, available at:

wlr,rv, dgft. gov. inl.

SoudiArobio 2O1

Figure 8.1

lndio-Soudi Arobio Biloterol Trode

50,000.00

45,000.00

40,000.00

35.000.00

o

= 30,000.00

=3 zs.ooo.oo

; 20,000.00ej r s,ooo.oo

r 0,000.00

5,000.00

2009-1 0 2010-t I

-'-."-Exports'--.-"lmports *Totol Trode

Source: Adapted from Directorate General of Foreign Trade, New Deliri, available at:

w.dgft.gov.in/.

Toble 8.2Shore of Oi/ in /ndio's lmports from Soudi Arobio iin US$ Millton)

Ytar

Oil imports

Jrom Saudi Total oil

Arabia imports

Saudi share Imports Per cent oJ oil

h total oLl .front Saudi in imports Jromimports Arabia Saudi Arabia

2012-13

2009-10 15,390 04 96,321 16

2010 11 17,932.31 115,929.06

201r-12 28,302 37 17).753 97

20r2-t3 29,896.53 18i,344 63

15.98 t7,097.57 90.01

15.47 20,385.28 87 .97

16.38 31,060.10 91.t2

t6.49 33,998.I l 87 .94

Source: Adapted from Directorate Genera] of Foreign Trade, New Delhi, available at

m.dgft.gov.in/

Yeor

€eoooE

98eotroUbseL

2O2 Mo. Muooessrn Quaraen

Flgure 8.2Shore of Ofl in lndio's lmports from Soudi Arobio

2011-12 2012-13

+Per cent of Oil from Soudi Arobio

Source: Adapted from Directorate General of Foreign Trade, New Delhi, available at:www.dgft. gov.inl.

imports from Saudi Arabia (Table 8.2 and Figure g.2). Saudi Arabiaremains India's largest suppiier of crude oii, accounting lor almost one-fifth of its imports (Table 8 2).

In 2012-13, lndia's total imports from Saudi Arabia stood at US$33.99blllion, witnessing a growrh of 6.85 per cenr from the previous year(Table 8 I) There was nor much difference in rerms of commoditieswhich compnsed crude oil, chemicals and fertilizers, plastic and rubberproducts, paper and wood producrs, animal products, dry fruits and nuts,pearls, metals and metal articles, etc. Indian exports to Saudi Arabia grewto US$9.78 billion in 2012-13 (Table 8.1). Major exports comprised ofpetroleum products, animal and dairy products, machinery, cereals, fruits

2010-r 1

Yeor

SoudiArobiq 203

and vegetables, cotton and textile, animal fodder, and so on. During

}OLZ-I3, Saudi Arabia emerged as the seventh largest markel for Indian

exports comprising 3.25 per cent of total exports, which is a growth of

72 per cent compared to 2011-12. Moreover, in 2012-13, Saudi Arabia

was also the source of 6.92 per cent of India's global imports, becom-

ing the third largest supplier after China and UAE. For Saudi Arabia,

India remains the fifth largest export market, accounting for 8 3 per cent

of its globa1 exports, but in terms of imports by Saudi Arabia, India

has become the seventh largest source, which is an improvement from

ZOLL-I2 when it was ninth.ao lt now accounts for nearly 4 per cent of

the former's total imports.al

Investments: ln addition to imports and exports, economic relations

have benefitred from rwo-way flow of investments. The prospects of saudi

invest-ments in lndia have remained untapped due to various reasons,

including a lack of confidence and less friendly investment en\'ironment.

Not much headway was made in the US$750 mrllion lndia-Saudi Joint

Invesrmenr Fund that was announced dunng the ninthJoint Commtsslon

Meeting (CM) held in New Delhi in January 2012. Meanwhrle, dunng

2Ol2-L3,lndia received US$7.13 million worth of investments from

Saudi companies recording a lO-fold growth in comparison to 2011-12

when it was US$0.7 million.a2

Although the investments have wrtnessed growth, the cumulative

Iong-term Saudi investments in India have remained constant at 0.02

per cent. In fact, Saudi Arabia fell back three steps to be 'iSth largest

investor in lndian market in 2013.ar According to figures released by

the Department of lndustrial Policy and Promotron between April 2000

and November 2013, Saudi companies have rnvesled US$41.18 million

in India.aa These investments can be located rn fields as varied as paper

manufacturing, chemicals, computer software, granite processing,

industrial products and machinery, cement, metaliurgical lndustries,

etc.a5 Moreover, among the Persian Gulf countries Saudi Arabia is the

thrrd largest source of foreign direct investment (FDI) into India after

UAE and OmanIndian businesses have invested in Saudi Arabia to the tune of

US$2.07 billion between 2000 and 2009.16 Farah Naaz Gaurl obsen'es

that lndian firms have shown remarkable interest in saudi market after

204 Mo. MuooessrB Qunr.,,rnn

implementation of new Saudi laws and have established joint ventureprojects or wholiy owned subsidiaries in the kingdom. According to thelndian Embassy in Saudi Arabia, the Saudi Arabian General InvesrmenrAuthority (SAGIA) has issued 426 licences to indian companies for jointventures or fully owned subsidiarles tr1l 2010, with expected invest-ments worth of US$1 6 billion in Saudi Arabia.aT According to iatesrf,gures available for 2012, nearly 350 Indian projects w-ere funcrioningin the krngdom with US$ 1.6 billion in sectors such as consrrucrion, con-tracting, admrnistrative consulting and IT.a8

Low investment figures notwithstanding, both sides recognize rhe

possibilities of enhancing rwo-way invesrmenrs. During his r-isit to lndiain March 2013, Abdul Rahman a1-Rabiah, Chairman of Saudr-lndiaJointBusiness Council (JBC) emphasized that 'Saudi Arabia is offering inr.esr-

ment opportunittes worth US$625 billion to Indian businessmen ln r.rral

sectors such as infrastructure, petrochemicals, electricity, IT, tourism,natural gas production, agriculture and education'.ae Besides Neu, Delhi,he visited Lucknow and Hyderabad to hold meetings with indian busi-nessmen and to invite them to invest in Saudi Arabia. Nloreor.er, theIndian side is aiso keen on attracting Saudi investmenrs in fie1ds suchas oil and gas, real estate and lucrative indian financial market. Duringhis r,rsit to Saudi Arabia to partrcipare rn the l0rhJCNI rnJanuarv 201,i,Finance Minlster P. Chidambaram

discussed rhe importance of Saudi investmenr in india and presentedspecific projects in lndia includrng Delhi-N{umbai lndustrial Corridor(D1I4IC); OpaL Perrochemical Complex. Gujarat; Petrochemrcal Complexat Mangalore, Karnataka, lOCL's LNG Project at Ennore, Tan-ril Nadu.Paradip Refinery,fetrochemical Project o[ IOCL at Paradip, and KochiPetrochemlcal Project of BPCL.5o

Owing to increased interests on both sides, some new projects hat e

been muted and a few of them reahzed. For exampie, in December2012, Tata N{otors signed a letter of intent with Saudi Arabra ro set upLand Rover plant in rhe country with an initial invesrment of US$1.2bi1lion.51 Moreover, Saudi Basic Jndustries Corporarion (SAB1C). one

of the world's biggest perrochemical compani.es, inaugurated a US $ 1 00million state-of-rhe-arr research and development (R6cD) centre inBangalore in December 2013.5')

Soudi Arobio 205

Energy Relotions

The story of India's economic growth cannot be divorced from energr

security concems. India imports nearly 80 per cenl o[ its energy require-

ments.53 With an increase of 5.1 per cent in oii consumption, lndia has

emerged as the third largest energy consumer in the world during 2012

after China and the US leaving behind Russla, Japan and Germany.5*

Saudi Arabra, on the other hand, rs the largest producer and exporter of

oi1 and has the largest known oil reserves in the world accounllng for one-

fifth of the proven oil resen'es. It is the largest source of energr for India

and supplies nearly one-fifth of lndia's energ/ requirements. Energy,* has

been one of the drir,rng forces behind India's relations with Saudi Arabia

and it wili continue to dominate the Indo-Saudi tles. As Table 8.3 shows.

the Saudi share in total oil imports by india contlnues to range betrveen

15 and 17 per cent during the past four years. lr'loreor,er, Saudl share inIndia's energy imports from the Persian Gulf countnes hovers around 25

to 30 per cent during the past five years (Tab1e 8.3 and Flgure 8.3).

During 2012-13, a slight increase of US$} brllion rvas recorded lnIndia's energy rmport biils from Saudi Arabia from the previous year.

Energy reiarions remained limited to imporrs but India is seeking Saudl

investments to deveiop in dovunstream petroleum industry and received

a positive response. The two countnes agreed to encourage cooperaiion

Toble 8.3lndio's Energy lmports from Soudi Arobio lin US$ Millton)

2009-14 2014-11 2011-12 2412-13

Energy imports fromSaudi Arabia

Total energy imports 96,321.16 1I5,929 06

Total energy imports 55,904.14 66,688 40lrom Persian Gulf

Share in total energy 15.98 15.47

rmports

Share in energy imports 27.53 26.89Il'om Persian Gulf

l5.lrr0 0d l;,al2 3l 28 l.r2 I 20.806 ll

t72,753 97 1B1,3,+4 63

95,9r5.24 r05,809.19

16.38 16.49

29.13 28.26

Source: Adapted from Directorate General of Foreign Trade, New Delhi, available at:

www. flgf 1. 96a. i6,'.

246 Mo. Muooe,ssrR QuAMAR

Figure 8.3Shore of SoudiArobio rn lndio's Oil lmports

2010-l r 2012-13

Yeor

---.--- Shore in Totol Oil lmports+ Shore in Oil lmports from Persion Gulf

Source; Adapted from Directorate General of Foreign Trade, New Delhi, available at:

www. dgft.gov.in /.

in the field of oi1, gas and minerals through a Joint Technical Team dur-ing Finance Minister P. Chidambaram's visit to Saudl Arabia inJanuary2014.55 These developments may lead to enhanced cooperation in the

fie1d of energy in the near future.

Defence Relotions

Defence has been an important area o[ mutual concem for India and

Saudi Arabia, which has led to cooperation for peace and security inthe region. The previous year was an important milestone with the visit

35

30

6

b2seEtlo20Eobt5+Eoubro!-

SoudiArobio 207

of Defence Minisrer A. K. Antony, and extradition of terror accused to

lndia. Although defence and security remains a critical area of bilaterai

rela[ions, 2013 did nor wirness any major development in this fie1d. The

two countries have continued to cooperate in anti-piracy operations in

the lndian Ocean. Moreover, they had agreed to form a Joint Committee

on Defence Cooperation in 2012 that heid its first meeting in September

2012 in New De1hi. 'Durlng the meeting both sides expressed their

interest in further enhancing defence exchanges and interactions between

their armed forces.'56 However, thlngs remained muted in 2013'

During his visit to Saudi Arabia in May, Extemal Affairs Minister

salman Khurshid expressed satisfaction over the progress made in

defence and security reiations between the two countries.5T He further

sald, ,The Security and stability ln the Arabian Peninsula is closely linked

to the security in South Asia', indicating the importance India attaches to

Saudi Arabia with respect to domestic and regional security.5s He told

the saudr Engllsh datly Arab News, 'lndia considers saudi Arabia a centle

of stabiiity in the region,' and that 'Bllatera1 security cooperation between

India and saudl Arabia wili contribure to regional stability and ln

addressing the common threat of terrorism in the region.'5e This outhnes

Indian desire to cooperate with Perslan Gulf countries to fight terror

parLicular[y cross-border terrorism.

With respect to security and defence, an important question that has

reverberated in recent times iS India's response to the security concems of

the Arab counrries, particulariy in the context of recedlng American stra-

tegic presence in the region. India till now has treaded a fine line lvithout

taking a ciear stand. However, dunng the 2013 Manama Dialogue Extemal

Affai.rs Minister salman Khurshld said that, 'India has the capabilities and

the wr11 to not oniy safeguard lndia's own coastilne and island teritones,

but also contnbute to keeplng our region's SLOCs lsea lines of communi-

cation] open and {lowing,'which is of vital importance for India's economy

and security.60 At the same tiIne, he re;ected speculations of lndia prol'id-

ing on-the-ground milltary assistance and secunty like the US 6I

Culturol Relotions

Cultural ries between India and Saudl Arabia have grown dunng recent

years. lndia has a memorandum of understanding (MoU) on Cultural

Cooperation with Saudi Arabia, an agreement in the field of youth and

208 Mo. MuoonssrR QUAMAR

sports, and another MoU of Scientific and Educational Cooperatron. Boththe countries wish to increase cooperation in the fie1d of education andresearch. lt is ln this regard that an MoU for joint research programmeswas signed between the two countries. Moreover, an agreement wassigned between King Abdulaziz Foundation for Research and Archtvesand India-Arab Cultural Centre ar Jamia Millia Islamia, New Delhi, totranslate important Arabic books on history and culture of the Kingdominto Indian languages.62 However, norhing happened dunng 2013.

Tourism has emerged as an important area where both sides find pos-sibilitles of growth Although both sides have expedited rheir efforts toattract tourists, things have not yet matedalized into tangible results.India has tried to promote itself as a possibie roudst destinarlon forSaudis. The Indian embassy in Riyadh, in association w-irh Minisrry ofTourism, had organized road shows at various places in the Kingdom toencourage Indian rourism in Saudi Arabia. A proposal to sign an N,{oU

to boost tourism was mooted by indian side in 2012 but no progresshas been made in this direction.6r A number of events and r,isirs hadtaken place during 2012 rndrcatrng enhanced interesrs in impror,rngbilateral cultural relations. lndian CulturalWeeh was organized in Riy'adhin November 20L26+ and a Saudr,vouth delegation had r,rsited Indra inMarch 2012 5j In May 2013, Rodd Shows were organized in the cities ofJeddah, Rryadh and Dammam ro woo Saudi tourisrs ro India.66 A high-level delegation led by the Secrerary Tourism, Governmenr of Indla,Perwez Dewan, and consisting of State Tourism officers and private touroperators visited the Kingdom for the occasion.

Expatriates: Indians comprise the largest expatriate communlty in SaudiArabia, accounting for nearly one-thlrd of the total expatriate pcpula-tion.67 Currently, the number of Indians engaged in l.anous works inSaudi Arabia ts estrmated at 2.8 million. As much as 50 per cent com-prlse unskilled labours working in constl-uctron, or1 industry and otherunorganized sectors. Saudr Arabia continues to attract the largest num-ber of Indian workers; during 2012 out of 747 ,Oll noi-kers thar soughremigration clearance to go abroad for rvork, 357,103, thar is, nearly 45 percent went to Saudi Arabia.68 India received US$70 bilhon in remrtranceslrom abroad dur.ing 2012, of which, nearly US$30 bilhon came from rheGulf Cooperation Council (GCC) counrnes.6e Among the GCC, Saudi

SoudiArobio 209

Arabia is the largest source of remittances, amounting to US$3.5 blllionannually, which ls aiso the largest inward {low of foreign exchange from

a single country.An important area of problem with respect to Indi.an expatriates in

the GCC countries, including in Saudi Arabia, has been exploitation of

the workers as well as harsh living conditions. India has continuously

raised the issue at bilateral forums and seeks bilateral agreements withdestination countries to improve working conditions of Indian rvorkers.

India celebrates Pravasi Bhartiya Divas (PBD) to improve linkages withits diaspora every year. ln 2013, an Indian businessman in Saudl Arabia

Mohammed R. Karuvanthodi was awarded PBD award for buslness in2013.70 According to the Minlstry of Overseas Indian Affairs, the explci-

tation of Indian workers in Gulf countries has come down during recent

years due to steps taken by the govemment as weil as efforts of lndianexpatriate communities in the respective countries.Tl

Nitaqat: An important issue that emerged ln 2013 was the Saudrzationprogramme launched in 2011, name11, Nitaqat. It has been launched to

rmprove job prospects for Saudi nationals in pnvate sector. The issue

reverberated in India due to its impact on the workers and their faml-

lies. It was reported rhat lndian r.vorkers would be worst affected due

to the policy because they constitute the largest number in sma11-

and medium-slzed enterprises that were worst hit by Nitaqat. Indian

authorities took up the issue with Saudi Arabia and India-Saudi JWGwas formed to rvork towards minimizing fallout of Nftaqat.ir In April,King Abdullah 'announced a grace period rliot ing oterslrring espatri-

ales to correct status, get new lobs or leave the counln' rvithout facrng

penal action ti11 the end of the grace period', on 3 Nor.,ember.;r lndian

workers benefitted the most from rhe grace period and as much as 1.4

million indians regularized their job status dunng the period.T+ How-ever, nearly 75,000 Indian workers returned after they were lssued

emergency certificates by the Indian embassy in Riyadh.75 A large

chunk of these returnees belong to Kerala that has the largest number

of expatriate workers in the Gulf. Though Nitaqat posed an important

challenge for lndo-Saudi relations during 2013, rt was handled carefully

by the Indlan authorities. The issue figured prominently during Salman

Khurshid's r.isit to the kingdom in N,[ay.76

210 Mo. Muoonssrn Qunu,qn

Hajj: India is home to a large popularion of Muslims who have travelledto the holy clties of Mecca and Medina to perform Ha;j and Umrah(pilgrimage to Kaaba carried out not during Hajj) since the advenr ofIslam. lndia has continued to send one of the largest groups of pilgrimsfor Hajj in modem times. In 20L0, a record number of 17l,67l Indianpilgnms visited Saudi Arabia for Hajj, while in 2011 the number was

170,362. Despite a request by india for an increase in Haj.1 quota, rhe

number for 20L2 remained the same and a total of 169,971 indianpilgrims visited Saudi Arabia to perform Hajj. Saudi Arabia had to cutdown on the number of Hajj pilgrims for 2013 due to the ongoingexpansion work in Masjid al-Haram in Mecca. Therefore, rhe numberof Indian Ha3j pilgrims came down to 135,938. However, more rhan

200,000 Indian pilgrims visited Saudi Arabia to perform Umrah during201.2-L3.rr Indian authorities have constantly worked towards pror.Ldinga smooth Hajj for Indians through improved services, monitonng and

consultation wrth Saudi authorities. In August, Secrerary (East). NIEA,

Ashok Kantha visited Saudi Arabia to review arrangemenrs for Haj.1 and

expressed satisfaction over the preparations.

Externol Ployers

India's relations with Saudl Arabia are aflected by imporranr intema-tional and regional players such as the US. China, Pakistan, lran andIsrael, all of whom have stakes in the regional d,vnamtcs. The US domi-nance in Middle East is noticeably recedrng in recent rimes while Chinahas been trying to enhance i.ts presence, and both these developmentspose strategic challenges for India. Paklstan has historically played thereligious card to isolate India from Muslim states but the situation has

started to change ln recenl times due to realignment in India's foreignpolicy and active diplomacy. However, Pakistan's 'brotherly' relarions

with Saudi Arabia remain a potent challenge for India. Additional}y, iranand Israel are two important regional players lvith w.hom India has goodrelations but both have an antagonistic relation wlth Saudi Arabia that

can potentially affect the lndo-Saudi ties.

The US: The US is a de Jacto regional player because of irs long presence

and historical dominance in the Middle Easr and Persian Gulf. SaudiArabia is a strategic ally of the US and the alliance goes back to the

Soudi Arobio 211

I930s when oi1 exploration started in the kingdom Moreover, towards

the end of the Second World War, the US provided security to the

persian Gulf replacing Britain. Thus, the historical relations between

the US and Saudi Arabia are forged in oil and security'78 However'

a number of developments in the recent times have lndicated differ-

ences between the US and Saudi Arabia as well as changing regional

dynamics and American policy in the region' This has become evident

during the Arab Spring, particularly in the case of Egypt and Syrla ln

th. .us" of Egypt, Saudi Arabia rushed to provide aid and support after

the military dismissed Mohammed Morsi's government in Ju1y 7e On

the other hand, the US has taken a cautious approach, emphasizing

on the need for restoration of peace and democracl'80 In Syria's case'

Saudi Arabia was pressing for extemal military inten ention to remove

Bashar al-Assad, parricularly after the alleged use of chemical weapons

by the regime in Augus[.8] However, the US chose to think otherwrse and

agreed ro rhe Russian proposal whereby Syria consented to surrender its

siockpile of chemical weapons.E2 This evidently angered the monarchv

and Saudi Arabia refused ro take the non-permanent seat in the UNSC,

protesting against inactlon on Syria.83 Moreover, the interim nuclear

deal between lran and g1obal porvers has further exposed the fissure tn

uS-Saudi relarions.s* Apart from the changing dl,namics of US-Saudi

relations, American interests and policy in the Persian Gulf have under-

gone substantiai change. In fact, due to increasing domestic economic

concems and changing global and regional situatlon, the US influence in

the reglon has started to recede, which is a maior concem for India par-

ticularly with respect to its energy security dependence upon the region.

china: The saudi-Chinese relations have grown manifold in recent times.

China has started to emerge as a major global player because oI lts eco-

nomic strides and soft strategic presence in many parts of the n'or1d. It

has emerged as a main competitor for Indla in the Persian Gulf because

of the overlapping trajectories of interests particularly with iran and

saudi Arabia. on rhe other hand, Saudi Arabia has looked to diversify its

dependence on outside powers and consrders china as a major lntema-

tional player. Bilateral trade has grown manifoid between the two coun-

tries and china has emerged as Saudi Arabia's largest trading partnel

accounring for us$73 billion during 2012-13.85 Notwithstanding the

212 Mo. MuooassrR euAMAR

growing trade and cornmerce, the Saudi-chinese relatlons face numer-ous challenges. China is equally interested in lran and maintains com-mercial ties and fnendly relarions. In fact, togerher with Russia, Chinahas emerged as a major straregic piayer workrng towards bringing anend to Iranian isolation as well as in countering Saudi moves in syria.Moreover, China neither has the desire nor the capability ro replaceAmerican mllitary presence in the region, which is critically lmportantfor Saudi security.s6 India's options are limited when it comes to Chi-nese presence in the region. On the bilateral front, it has to competewith China in terms of trade and energy imports but ar the regionalfront it needs to cooperate with china in the case of receding Americanpresence.

Pakistan: Pakistan and Saudi Arabia have maintained 'brotherly' rela-tions based on their Islamic he.tage since 1947.87 This had remarneda ma;or roadblock for Indo-Saudi relations in the past. Ho,uvever. thesituation changed rvith changing global dynamics as both Saudr Arabraand Indian recognized each other's importance and economic porenrialof bilateral relations. The Saudi decision in 2ol2 to exrradrte a num-ber of terror suspects to India despite pakistani reservations is seen bycommentator as significant change.88 This situation has started to iookdifferent in 2013. with the interim lranian nuclear deal, Saudi Arabiahas begun to look at Pakistan as a counrerforce against lran. Reportshave emerged that Saudi Arabia mrght try ro procure nuclear u.eap-ons from Pakistan.se Moreover, many commeniators ha'e highlighredthe intricate relations between the two thar encompass their domestrcand external concerns.e0 Given the fast-changing situation in the N,liddleEast and saudi policy ro counrerwelght lran and receding US influence.India needs to keep the Pakistani angle in mind while der,tslng a pohq,towards the region.

Iran: The interim nuclear deal between iran and world powers con-cluded in Gene'a rn November has disturbed saudi Arabia as ir cor-n-petes with lran for regional dominance. The two share deep-seatedsuspicion towards each other due to polirical, ethnic and sectanan differ-ences. saudi Arabia has become increasingly suspicious and uneasy with

I

i

SoudiArobio 213

Iran's alieged nuclear ambitions leading to speculations rhat the king-dom might try to procure nuclear weapons in the eventuality of anha-nian rapprochement with the West. Moreover, Saudi Arabia has accused

lran of trylng to incite Shias in Bahrain and ln its Eastem Province since

the outbreak of Arab Spring. The Kingdom sees lt as an Iranian design

to destabllize the Arab countries in the Gulf regron that would enhance

Iran's strategic positlon. India, however, looks at lran as an impor-tant regional player which is closer home and has overlapping interests

when it comes to Afghanistan. With the growlng hkellhood of Ameri-can withdrawal from Afghanistan by December 201'1 wrthout puttingin place a stable and strong Afghanistan, lranian importance in the

region would increase manifold.el

Israel: Israel rs another important regional player that has good rela-

tions with India. However, Saudi Arabla and Israel do not share drp-

lomatic ties as the former does not recogni.ze the latter as a Legitimate

state because of histoncal reasons. The situation does not seem to alter

an)rtime soon despite renewed American efforts at finding a resoluuon

to the israeli-Palestinian conflict. Despite antagonistic relations, lsrael

and Saudi Arabia found themselves on the same page over the lraniannuclear issue and evoked speculatlons about their posslble cooperationto counter lran. Although Israel does not directly affect lndia's relations

with Saudr Arabia, India's policy towards the region wr11 need ro balance

the contrary' forces wilh respect to its interests.

Chollenges

There are numerous macro- and micro-1eve1 challenges pertarning to

lndia's relatrons with Saudi Arabia. At the macro 1eve1. the most impor-tant aspect is to take the bilateral engagements be1'ond trade and com-merce. Defence and security cooperation have made some stndes butthe two would need to improve political and cultural exchanges toreahze the visron of 'strategic partnershlp'. There are ser.eral aspects

that need more attention particularly, with respect to each other'sengagements w-ith reglonal adversaries. India l-ras been able to balance

its bilateral relations with multiple regional actors, such Iran. Israel

and Saudi Arabia, but as engagements get deeper India would need

21 4 Mo. Muooessrn Queuec

to tread a fine line on issue basis. There are several differences withSaudi Arabia on regional issues such as the Syrian probiem, turmoilin Egypt, lranian nuclear issue and Israeli-Palestinian conflict. Addi-

tionaliy, Saudi engagements in Afghanistan and Pakistan have harmed

Indian interests and compromised on its security which needs to be

taken up with Saudi Arabia.

The two developlng economies can further enhance their strategic

relations by taking confidence-building measures at the mlcro level For

example, desplte robust economic relations, there are scopes for fur-

ther improving bilateral trade. Investments in each other economies inemerging areas would be benefrcial and help deepen the engagements.

lndla needs to lncrease people-to-people contacts with Saudi Arabia

through non-traditional means such as youth exchange programme,

educatronal exchanges and cultural activities. India needs to thlnk about

Saudi market and find mechanism for skr11 development for workers

golng to Saudi Arabia. Labour outflow is an important area; India now

has an agreement on domestic workers and it would be important that

an agreement covering all workers is signed. It needs to streamline the

means and processes at internal level, taking measures so as to avoid

fnvolous recruitments that lead ro exploitation. The Ministry of Overseas

lndlan Affairs (MOIA) has taken steps to educate workers, seeking emi-

gration for work, of the prtfalls and problems ihey might face However,

it still reaches very few of those r'r,ho seek work abroad parti.cularly inrural areas.

Another important challenge is to monitor the funding of Islamic

seminaries in India that have contnbuted in perpetuating educational

backwardness among india Mushms.e2 A number of such seminaries

seek private funding from Saudi Arabia and other Arab countries which

helps them in sustaining the system.er Arguably, some motivated and

disgruntled elements have used these channels to finance radical behav-

rour including r,rolent activities.e4 lt is, however, a sensitive issue among

Indian Muslims as well as can ruffle Saudi feathers. Therefore, the issue

needs to be taken up with Saudi Arabia in a manner to avoid any reper-

cusslons. Since intemal security has become a concern for Saudis as wel1,

it is important that this issue is used to burld confidence and streamline

the process of seeking foreign funds for seminaries. More importantly,India needs to monitor these fundrng and act firmly when necessary.

I

I

Soudi Arobio 215

CONCLUSION

The year 2013 proved to be another good year in Indo-Saudi bilateral rela-

tions as the lndian Extemai Affairs Minister visited the Kingdom and India

succeeded in slgning a labour agreement. The continued cooperation in

the area of defence and security and prospects for intelligence sharing were

ma.;or diplomatic achievements. Trade and commerce continued to flourish

and two-way investments got a boost during the year while energy i.mports

from Saudl Arabia witnessed increase. Another important achievement on

part of India was its reaction and response to the Nttaqat issue. Imtial con-

cems regarding impact on Indian workers proved to be misguided as the

impact remains limrted due to proactive role played by the lndian authon-

ties and the lndian mission in Riyadh. A smooth HaSj with large Indian

participatlon dunng 2013 rndicated strong relations. N'loreover, India tned

!o attract Saudi tounsts and investments through roadshorvs in various

cities in the Kingdom, whrch should help attract business as u'e1I as casual

tounsts. However, there is stil1 a need to strengthen the ties and thlnk

beyond tradldonal measures and look for lnnovative means to engage u-rth

the Kingdom that will attract investments as well as go a long u'a,v ln real-

izing the rnston ol sLraLegic partnership . A proactive engagement remains

by and large missing, w'hich requires attention of the authorities as infintte

posslbihties remain unachieved in Indo-Saudi relations.

NOTES

I . For a through reading, see Joseph Kdchichian. Legal ond PoliticcLl Rc/onns in

Saudt Arabta (London: Routledge. 2013), Nladalvi a1-Rasheed. A History

oJ Saudt Arabis (Cambridge: Cambridge Universitl' Press, 2010)t Sarah

Yizraeli, Politics and socie tl in Saudi Arabia: The Crucial Years oJ Development,

1960-1982 (London: Hurst and Companl', 2012).2. 'Saudi Arabia Religlous Police Chief Announces New Curbs'. BBC News,

3 October 2012, available at: http://wt'r,v.bbc.co.uVnervs/u'orld-middle-east- 1 9B 1979 1/.

3. Frank Gardner, 'London Oll,rnpics 2012: Saudis Al1on'Women to Com-

pete', BBC News, 24 June 2012, available at: http://wwu'.bbc.co.uVnews/rvorid'middle -east- 185 71 193/.

,1. Saudi Woman's Weblog, 'Loujain Al Hathloul', 9 November 2013, available

at. http://saudiwoman.me/20 13/1 1/094oujain-a1-1-rathlouV.

6

21 6 Mo. Muooessrn Queuen

Eman al-Nalan, 'Saudi Women Drivers Not Deterred by Arrest' , Al-Monitor, INovember 20 1 3, available at : www. al-monitor. com/puis e/ onginals/ZO 13 / I I /saudi-arabia-women-driving-campaign. htmU.Fouziya Khan, 'First Female Law Firm Opened in Jeddah', Arab News, 3

January 2014, available at: http://wwrv.arabnews.com,/news/5027 9l/.Amnesty lntemational, 'Saudi Arabia Punishes Two Activists for VoicingOpinion', 1 1 March 2013, available at: http://www.amnesty.org/en/news/saudi-arabia-punishes-two-activrsts-voicing-opinion-20 1 3-03- 1 1/.

rhidAbdullah A.1 Dahlan and Badr A1 Shahry, 'Court Convicts Oyouni andHuweider to Ten Months Prison and Two Years Travel Ban', Al-Hayat [ArabicDailyl, 1 6 June 20 1 3, avallable at: http. / / alhayat. com./Details/ 524 \ 87 / .

Manal al-Sharif, 'Convictron of Wajeha Al-Huweider and Fawzil,a A1-

Oyouni', I6 June 2013, available at: www.manal-alsharif.com,/.Suad Abu-Dayyeh, 'Saudi Actir,,ists Wajeha Al-Huweider and Fawzia A1-

Oyouni Jailed for Tqnng to Help Starving Women', The Independent, 15

July 2013, ar.ailable at http.//blogs.independent.co.uW20I3/07/15/saudi-actn ists-wajeha-a1-huwarder -and-fawzia-a1-oyouni-jailed-for-trying-ro-help-stamng-woman/.'Appeal Court Confirms District Court's Conuction of Oyoum and Huu,ei-der to Ten Montl'rs Prison and Two Years Travel Ban', 26 September 2013,available at: u,r,l.lv'.saudiwomenrights.wordpress.corn/.Tob1, Matthiesen. 'A "Saudi Spnng?": The Shi'a Protest Movement in theEastem Pror'rnce 201I-20i2'. TheMiddle Ea:tlownal,2012. Vol. 66, No 4.

pp 628-59.Prince Muhammad bin Faisal rvho rvas Gor.emor ol Eastem Pror.rnce since1985 was replaced by Prince Saud bin Nayef rn January 20i3 allegecilybecause of hrs failure in handllng the protests.The seat was vacated due to the death of Prince Sattam who had succeed-ed Prince Salman after his elevation as Defence lv{inister upon rhe deatl-r ofCrown Prince Sultan. Khalid is son of Bandar, the oldest survivrr-rg son ofAbdulazlz bin Abdulrahman al-Saud who had lost out to Sultan in 1982in the iine of succession. He had lobbied since then to place his sons rnplum posrtion rn the government.'The Kingdom Takes a Historic and Unprecedented Stand to Refuse UNSCSeat', Al Rryadh lArabic Daiiyl , 19 October 2013, avaiiable at: http://u.snvalriyadh.com,/2 013 / l0/ 19 / articleB76690 htmV.

See Robert F. Worth, 'Saudi Arabia Rejects U.N. Securitl, Council Seat inProtest N{ove', fhe Neit, \'orh. Times, 18 October 2013, ar.allable aL. http.//www.nytimes. corrl2013/1.0/ l9lwo11d/middleeast/saudi-arabia-rej ects-se-curity-council-seat.html?_r=0/.For example, see Mutlaq Saud a1-Mutery, 'Nothing New in Saudi Stand',Al-Rtyadh [Arabic Dal1y],21 October 2013, available at: http://www.a1nyadh.com/20 1 3/1 0/21 / article9T 7 255.htmy

8.

9.

10.

t1

L2

t3

t4.

15.

r6

t7.

LB.

SoudiArobio 217

19. For example, seeJamil al-Ziyabi, 'The "Great Satan" succeeds ... and Gulldisappears!' AL-Hayat [Arabic Daiiy], 25 November 2013, available at:www. alhayat. com/OpinionsD eta1ls/ 57 5 5 4 5 /

20 Abdel Aziz Aluwaisheg, 'Saudi Budget 2014 and Economic Performance',Arab News, 29 December 2013, available at: http://www.arabnews.com,/news/500101/.

2I. Fahad Alturki, 'Saudi Arabia's 2014 Budget' Jadwa lnvestmrnt, Riyadh, 23December 20 i 3, available at: www.jadwa.com,/.

2 2 . 'Recent Economic Developments and Highlights of Fiscal Years 1434/1435(20I3) and 1435/).436 (2014)', Press Release, Ministry of Finance, KSA,23 December 20 1 3, available at: http://www.mof. gov.sa./English,Down-loadsCenter,Eudget/Statement% 20Derailso/o 20(PDF) pd7

23. 'Recent Economic Developments and Highlights of Fiscal Years 1433/1434(2012) and 1434/1435 (:013)', Press Release, Minisrry of Finance, KSA,23 December 20 12, available at: http://www.mof.gov.salEngllsh/Down-loadsCenter/Budget/Stateme ntok2)by ok2)rhe % 2 0Ministryok20 ofok2}F i-nance o/o 2 02 0 I 3 o/o 2 0Fina1. pdfl .

24. 'Recent Economic Developments and Highlights of Fiscal Years 1434/1435(2013) and 1435/t+36 (2014)'.

25 rbid.26. Central Department of Statistics & Information, Kingdom of Saudi Arabia,

available at. hitp://wu,w.cdsi.gov.sa,/englisMndex.php?option=com_docman6rtask=cat_\iew&gid=85&1t emid=l 62/ .

27 'Saudi Arabia's Strong Growth Offers Chance to Tackle Job Challenge',lnternational Monetary F und, 24 l:uJy 2 0 1 3, available at : http ://www. imf . orgiextemaUpubs/ftlsurvey/so/20 13 / car07 24l3a.hm/ .

28. King Saud l'islted India in 1955 which r,vas recrprocared by Prime Nlinister

Jawaharlal Nehru in 1956. Trventy-six years later, Prime Minlster IndrraGandhl r.isited Saudi Arabia in 1982 For details, see Prithr.i Ram N,ludiam.lndia and the Middle East (London: British Academy Press. 199-l).

29. For the detarls of official lndran statements during rhe risit, includlng theRiyadh Declaration, see Sonia Roy, 'Prime \4inister N{anmohan Srngh rnSar-rdi Arabia, 27 February,-1 N4arch 2010', India Speaks-special lssue, No.

'1-S, B lvlarch 2010, N,liddle East Instirute, Nerv Deihi, available ^t'.http://

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Release ,lvlinister of External Affairs, New De1hi, 20 May 20i3, available at:

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31. Siraj Wahab, 'Salman Khurshid: Nitaqat Issue Has Been Completely \4is-understood', Arab Nerys, 27 May 2013, available at: http://www.arabnews.con/news/153027 /.

32 Ibicl.

218 Mo. Muooassrc Qunr,,lee

33. 'Opening Statement by Externai Affairs Minister at Joint Press Confer-ence with Foreign Minister of Kingdom of Saudi Arabia, in Jeddah'.Speeches and Statements, Ministry of External Affairs, New Delhi, 25

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36, 'Chidambaram Leaves on a Two-day Visit to Saudi Arabia', The Timts oflndia. 27 Jamary 2014, available at: http://articles.timesofindia.indiatimes.com/20 14-0 1 - 27 /india/ 466838 1 7_ 1_india-saudi-arabia-saudi-companies-p-chidambaram,/.

37. 'Crown Pnnce's February India Visrt to Promote Business Links', Arab News,

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40.'lndia-Saudi Bilateral Relatlons'.

41. rbid.42. 'Factsheet on FDI', Deparlment of lndustrial Policy and Promotion, New

Delhi, avarlable at: www.dipcc.nic.in/,43. rbid.44. rbid45. Farah Naaz Gaun, 'Indo-Saudi Trade Relations' , Arabian loumal of Business

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SoudiArobio 219

51. 'Tata Motors-ownedJLR Mu1ls Plant in Saudi Arabia, Signs Letter o[ Intent',The Economic Times, l1 December 2012, available at http.//articies.eco-nomictimes.indiatimes.com,/20 12 - 12 -l I /new s/ 3 57 49 480- 1-chief-execu-tive-ra1f-speth-j 1r-j aguar-land-rover/.

52. 'SABIC Opens $100m Technology Centre in Bangalore', The Economic

Times,2 December 2013, available at http'.//articles.economictimes.india-times. com./2 0 1 3 - 72 - 02 /new s/ 44 6 57 4 0 6 -l -sabic-saudi-basic-lndustries-corporation- technology-and-innovation/.

53. Sun-Joo Ahn and Dagmar Graczyk, UnderstandingEnerg Challengesinlndia:Policies, Players and Jssues (Paris: Intematlonal Energy Agency ,2012) .

54. 'Demand Continues to be Driven by the BRICS', Global Energ Statistical

Yearbooh 2013, avallable at hrtp:/lyearbook.enerdata.nerl#analyse/. Othersources claim it is the fourth largest consumer after China, the US and Russia,

for example, see Vrctor Mallet, 'India's Reliance on lmported Energy Threat-ens Long-term Recovery', Financial Times, 12 September 2013, avaiiable

at: http://www.ft.com/cms/s/0 / c207 92e2-7b8,1- 1 1 e3-b678-00144feab7de.html#axzz2t69yY\Xn/.

55. 'The Finance Minlster P. Chidambaram Retums Home after His SuccessfulTwo Day Visit of Saudi Arabia ...'.

56. 'First Meeting of India-Saudi Arabia Joint Committee on Defence Co-operation', Press InJormationBureau. New Delhi, 10 September 2012. ar.ai1-

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61. rbid.62. 'Yast Indian Community behind Flourishing lndo-Saudi Relations', The

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64. 'lndian Cultural Week Celebration in KSA from 3rd to 7th November2OI2', Press Release, Embassy of India, Kingdom of Saudi Arabia, Riyadh,

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220 Mo. Muoonssrn Quamnn

66.'india-Saudi Bilateral Relations'.

67. K. P. M. Basheer, 'At 28 Lakh, There Are More Indians in Saudi ArabiaThan Estimated'. Business Line, 6 November 2013, available at: http://www.thehindubusinessline.com./news/internationaVat-28-\akh-there-are-more-indians-in-saudi-arabia-than-estimated,/arti cle5 322421 . ece / .

68. AnnualReport2012-13, MOIA, available at http://moia.sovin/writereaddata./pdTAnnual_Report_20 I2-20 I 3.pd7

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71. 'Expioltation of Indian Workers in Gulf Has Come Down: Minister' , Ot,er-

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72 Atul Aneja, 'India-Saudi Arabla Jolnt Working Group to Mitigate NitaqatFallout', The Hindu,29 April 20I3, available at: www.thehlndu.com,/nervs/internationaVrvorid-/indiasaudi-arabia-j oint-group-to-mrtigate-nitaqat-fall-out/article4663 427 .ece/ ,

73.'lndia-Saudl Bilateral Relations'.

7'1. 'Saudi Arabia Seeks to Al1ay Fears in India over New Labour Law', The

Hindu, 2L November 20 I 3, available at: http://www.thehindu.com./news/nationaysaudl-arabia-seeks-to-a11ay-fears-in-india-over-new-labour-1auy'ar-

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75. Atul Aneja, 'Over a Million Indian Secure their Stay ahead of Saudi Deadline',

The Hindu, 1 I Apni 20 13, available at: www.thehindu.com/news/intematron-aVworld,/over-a-million-indlans-secure-their-stay-ahead-of-saudi-deadline/article5 3 0990q. ece?homepage=true/.

76. Wahab, 'Salman Khurshid'.77,'lndla-Saudi Bilateral Relatrons'.78. For a thorough reading of the US presence in the Persian Gulf and strategic

relations with Saudi Arabra, see David E. Long, The United Stdtes and SaudiArabia: Ambivalent Allies (Boulder: Westvier.v Press, l9B5); Rachel Bron-son. Thicher Than Oil: Ameica's Uneasy Partnership with Saudi Arabia (Neu.

York: Oxford University Press, 2006); F. Gregory Gause 111. OilMonarchies:Domestic and Secuity Challenges in the Arab Gulf States (Washington. D.C..Council on Foreign Relations, 199,1); and Robert J. Pau1y, U5 Foragn Policl,

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79. 'Morsi's Fall in Eg.pt Comforts Saudis, Disconcerts Qatar', Ahram Online.ll.Jn1y2013,availableat http://engllsh.ahram.org.eglNewsContent/1/64/7073/Eglpt/Pohtics-A'{orsls-fall-in-Egypt-comforts-Saudis,-disconcerts-.aspx/.

80.

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Jennlfer Epstein, 'Obama "Deeply Concerned" by Egyptian Military'sRemoval of Morsi', Politico,3 July 2013, available at: hup://www.politico.com/politico4 4D0I3 I 07 / obama deeply-concerned by-egyptian-mi1itarys-removal-167603.htmV.Madawi al-Rasheed, 'Saudi Arabia Pushes toward Mihtary Strike ln S1'ria',

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Michael R. Gordon. 'U.S. and Russia Reach Deal to Destroy Slria's ChemicalArms', The Ncw YorhTimes,14 September 2013, available at. http.//rwwv.ny-times.com,/2013/09/15/world/middleeast/s1ria-ta1ks.htm1?page*'anted=a17.

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RobenF. Worth,'U.S. and Saudis in GrowingRiftas PowerShlfts' ,TheNewYorkTimes, 25 November 2013, available at: http://www.nytimes.com/2013/ll/26/world,/middleeast/us-and-saudls-in-growing-rift-as-power-shifts.htmi?n1=todaysheadlines&emc=edit_th-2013 I 126&_r= 1&pag%E2%800/o46&/.'Saudi-Chinese Trade lncreases by 14 Percent', AsharqAl-Awsal. 20 Nor.,ember

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with the Region (Nerv Delhi: SAGE, 2014); Tom Wrlght, 'Saudi Arabia Uses

Indla to Balance Pakistan', The WaLl Street lournal,23 October 2012, avail-able a.r: http://b1ogs.r,vs1.com./lndiarealtirne/2al)/10/23lsaudi-arabia-uses-india-to-balance-pakistan/; and Stephen Tankel, 'Pakistan's Stick,v Wicket.The India-Saud1 Link', Foreign Policy, 30 Ju11,- 2012. available at. hnp.//southasla. foreignpolicy. com,/postsi 20 I 2/0 7/3 0/paklstans_sticky_ivicket_the-india-sau dl-link iMark Urban, 'Saudi Nuclear Weapons "On Order" from Pakistan', BBC

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222 Mo- Muooassrn Queruen

commentary/contradictions-live-in-iran -lndias-tangled-web/#. UbRO S-

czlSp/.

92. D. Bandyopadhyay, 'Madrasa Education and the Condition of Indian Muslims',Economic andPoliticalWeehly,20-26 Apnl 2002, Vol. 37, No. 16, pp. 1481-84.

93 See Yoginder Sikand, Bastions oJ Belieters: Madrasas and lslamic Education inIndia (New Delhr: Penguin Books, 2005), pp. 1i7-tB.

94. See Stephen Tanke| Jihadist Violence: The Indian lhreat (Washington: WiisonCenter, 2013).