GCC & Neighbours: Symbiosis With India

Even as India ‘looks’ (& ‘acts’) West to consolidate her strategic and economic interests in the region, the Middle East, especially the GCC countries, is looking East as various factors such as the discovery of large reserves of shale in North America, the need for diversification, etc. have compelled it to look towards energy-hungry markets of India and China.

India’s relation with the GCC and neighbouring countries has been mutually advantageous on multiple fronts.

India provides a huge, hard-working workforce, both blue collar & white collar, for the countries in the Gulf. The significant economic contribution of the workforce has been acknowledged by the UAE ^[1], Bahrain ^[2], etc., among others. According to UN’s international migration report, 2017, India sent the maximum number of migrants abroad, more than half of which live in the Gulf.^[3]In fact, the Indian expatriate population constitutes 30% of UAE’s entire population.^[4]India continues to be the largest recipient of migrant remittance ^[5] and the Gulf is a prime source of the same. In 2015, five GCC countries- Kuwait, Oman, Qatar, Saudi Arabia, and the UAE-contributed 50% of the total remittance to India. ^[6]Saudi Arabia, in fact, accounted for one sixth of the total remittance to India. ^[7]The Middle East not just provides employment opportunities to our blue-collar and white-collar workforce, the remittance that this diaspora sends home has positive impact on our economy.

The push for nationalization of workforce in GCC countries (Emiratisation in the UAE, Nitaqat in Saudi Arabia, Qatarisation in Qatar, etc.)is concerning and will hurt Indian interests in the region. Both the parties would have to address this issue to mutual satisfaction.

India is 80% dependent on imports to meet its crude oil needs and the top three suppliers of the same in the 2017-18 fiscal have been the Middle Eastern countries - Iraq, Saudi Arabia, and Iran. ^[8]India plans to more than double the share natural gas has in its energy mix by 2022.^[9]This would mean further deepening of trade ties between India andQatar-one of India’s major suppliers of natural gas.^[10]Iran’s Farzad B gas-field, meanwhile, continues to remain a contentious issue between India and Iran.^[11]The latter had even threatened to allow Russian companies to enter the race for the contract of the gas-field.^[12]While Iran accuses India of not showing “flexibility” in pricing ^[13], India points to the difficulty in extraction and impurity of the gas.^[14]Given that both countries have cooperated during testing times of western sanctions, it shouldn’t be difficult to resolve this issue to the benefit of both.

UAE became the first country to participate in India’s Strategic Petroleum Reserves Programme when India and the UAE signed an agreement allowing Abu Dhabi National Oil Company (ADNOC) to invest $400 million by way of storing crude in India’s maiden strategic storage at Mangaluru built by the Indian Strategic Petroleum Reserves Ltd (ISPRL).^[15]

Countries in the Middle East have impressive sovereign wealth funds. ^[16]Given the need for diversification of investment in oil-rich gulf countries and Indian government’s push for infrastructure development and entrepreneurship through various flagship initiatives, there is ample scope for mutual cooperation and benefit in this field as well. In fact, the Abu Dhabi Investment Authority (ADIA) – one of the largest sovereign funds in the world - has signed an agreement with India’s National Investment and Infrastructure Fund (NIIF) to invest $1 billion in India. ^[17]

Crimes including hawala transactions, and terrorism is another important area for cooperation, especially in light of the spectre of radical Islam and social instability (Arab Spring) looming large over it. India has signed crucial pacts in this regard with Qatar ^[18],the UAE ^[19], Saudi Arabia ^[20], Iran ^[21], Bahrain ^[22], etc.

India'scrucial relationship with the Muslim Middle East notwithstanding, she has been able to simultaneously nurture and develop our relationship with Israel on all fronts – defence^[23], trade^[24], energy^[25], agriculture^[26], etc.

Iran is India’s gateway to the resource-rich but land-locked Central Asian Republics with the International North-South Transport Corridor (INSTC). Integration of the INSTC with Chabahar would further boost connectivity and trade.The CARs are a huge potential market for India and could in turn benefit from the energy market in India. China, given its geographical advantage, has already invested heavily in the region. In addition, China is also deepening its relationship with the Arab world on the “1+2+3” cooperation pattern and developing an all-round partnership covering political, investment and trade, social, culture and people-to-people, and security related aspects as is evident from China’s Arab Policy Paper. ^[27]With Iran inviting China and Pakistan in the development of Chabahar port, India needs to make sure that her interests are not harmed. ^[28]

India has been able to cultivate and deepen its relations in this complex region, largely insulating it from the sectarian (Shia-Sunni) and religious (Muslim-Jewish) schisms. From Saudi Arabia threatening to cut-off oil supplies ^[29]to India unless the latter closed down the Israeli consulate in Mumbai, to now allowing Air India to use Saudi air-space for the direct New Delhi-Tel Aviv flight,^[30] India’s partnership with the GCC, Iran, and Israel looks well poised to make great strides.