India-Kuwait Relations

Posted 22 Jan 2025

Updated 24 Jan 2025

5 min read

Why in the News?

The Prime Minister of India visited Kuwait, marking the first trip by an Indian PM in 43 years.

Key Outcomes of the visit

Award Conferment: Indian PM received Kuwait's highest honor, 'The Order of Mubarak Al Kabeer.'
Strategic Partnership: India-Kuwait relations elevated to a strategic partnership.
International Solar Alliance (ISA): Kuwait joined ISA for sustainable energy cooperation.
Asian Cooperation Dialogue (ACD): Highlighted the significance of ACD in regional cooperation.
- ACD: Inaugurated in 2002, the regional forum promotes cooperation among 35 Asian countries, with India as a founding member.
India-GCC Cooperation: Kuwait, as GCC President, pledged stronger India-GCC ties.
Defence Pact Signed: Key areas of cooperation include training, exchange of personnel and experts, joint exercises, cooperation in defense industry, supply of defense equipment, etc.
Other Developments
- Renewed Cultural Exchange Program (2025–2029) for arts, literature, etc.
- India praised Kuwait for hosting the 4th Dushanbe Process on counter-terrorism and border security.

Convergence in India-Kuwait Relations

Kuwait's Strategic Location and India's Interests: There is mutual convergence in securing the sea lanes of communications in the region. E.g., the Red Sea, the Gulf of Aden, the Gulf of Oman and the Arabian Sea, given that they are some of the world's busiest.
- Also, Kuwait's strategic position would strengthen India's connectivity projects. E.g., The India-Middle East-Europe Economic Corridor (IMEEC).
Kuwait's Petroleum-based Economy Converges with India's Energy Security: Kuwait's oil reserves account for 6% of global reserves and substantial gas reserves. It's oil revenues make up 94% of the state's income.
- Kuwait meets 3.5% of India's total energy needs & it has also expressed interest in India's Strategic Petroleum Reserve Programme.
- Petrochemical sector offers another promising avenue for collaboration as India's rapidly growing petrochemical industry is set to become $300 billion by 2025.
India is a Key Investment Destination: Kuwait Investment Authority (KIA) manages one of the largest baskets of sovereign wealth funds (~$1 billion), the fourth largest after Norway, China and the UAE.
India's Interest in Strengthening Ties with GCC (see box): Kuwait currently holds the presidency of the Gulf Cooperation Council (GCC).
India and Kuwait's Geopolitical Alignment: The growing political ties between India and Kuwait (part of India's extended Neighbourhood) reflect the evolving India-Gulf relations, shifting beyond oil trade.
- This strategic reorientation offers India opportunities to enhance its geopolitical influence (as a Net Security Provider) in the Gulf region.

Divergences in India-Kuwait Relations

Expatriate Welfare and Labor Issues: India's large expatriate community in Kuwait faces challenges like labor rights violations and mistreatment. The 2024 fire in Mangaf killed 40 Indians, highlighting poor working conditions.
Limited Economic Diversification: While energy trade forms the backbone of the relationship, both countries economic engagement is limited in other sectors. Also, India has a trade deficit with Kuwait.
Geopolitical Tensions in the Gulf: Kuwait's diplomatic stance during regional crises, like the Gulf War and the ongoing tensions in Yemen and Syria, can sometimes differ from India's non-interventionist policy.

India and Gulf Cooperation Council (GCC)

GCC Established: 1981
GCC Members: Comprises six member states. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE.

India and GCC Relations

Economic and Trade Relations: The GCC is also one of the largest trading blocs of India's foreign trade.
- E.g., in 2023-24, the bilateral trade between India and GCC comprised ~14% of India's total foreign trade.
- Trade balance is in the GCC's favour mainly because of the large volumes of oil and gas India imports from the GCC countries.
- Investment: Between 2000 and 2024, India received a collective FDI of ~US$25 billion from the GCC countries, excluding significant portfolio investments.
Energy Security: The GCC supplies over 50% of India's crude oil and 70% of its natural gas. E.g., Qatar is India's largest supplier of liquefied natural gas (LNG).
Indian Diaspora and Remittances: The GCC hosts over 8 million Indian expatriates, making it the largest expatriate community in the region. GCC countries are the second largest source of remittances to India, after the US.

Challenges in India-GCC Relations

Geopolitical Rivalries in the Region: The Saudi Arabia-Iran rivalry has impacted India's relations with both nations, complicating diplomatic and economic ties.
Labour Migration and Social Issues: India has raised concerns over the Kafala system migrant worker's employment and immigration status control) in GCC countries, highlighting issues like exploitation, human rights violations, and abuse of migrant workers.
- Example: A 2021 report by The Guardian revealed that around 6,500 migrant workers from India, Pakistan, Nepal, Bangladesh, and Sri Lanka died in Qatar since it won the FIFA World Cup host.
Slow Progress in Free Trade Agreement (FTA) Negotiations Despite ongoing discussions, the India-GCC FTA remains unresolved, hindering deeper economic integration.
Discriminatory "Asian Premium" on Crude Oil Pricing: The "Asian Premium" imposed by OPEC countries results in higher crude oil prices for Asian nations, including India, compared to Western buyers.

Conclusion

The recent visit of India to Kuwait marks a significant step in making the relations grow stronger. Going forward, early finalisation of the renewed Bilateral Investment Promotion Agreement, renewable energy and stricter monitoring of recruitment agents needs to be prioritised.