Why in the News?

Recently Prime Minister visited Saudi Arabia.

List of Outcomes

• Strategic Partnership Council (SPC): The 2^nd India-Saudi Arabia SPC created 2 new Ministerial Committees on Defence Cooperation & Tourism and Cultural Cooperation under it.
  • Formed in 2019, India is the 4^th country after UK, France and China to form such a council with Saudi Arabia. 
• High Level Task Force on Investment (HLTF): Aims to fast-track Saudi Arabia's $100 billion investment in energy, tech, infrastructure, and other key sectors in India.
  • Also, both sides agreed to collaborate on establishing two refineries in India.
• MoUs/Agreements Signed: Space (for Peaceful Purposes), Anti-Doping Education and Prevention, health, etc.

Significance of Bilateral Relations

For Both Countries

• India-Saudi ties reflect India's Middle East policy shift: From a past limited to remittances and religious diplomacy, India has entered a new era—of investment flows, strategic dialogues, joint defence platforms, etc.
  • Hence, India's engagement with the Saudi Arabia is not an outreach. It is a realignment of relation.
  • E.g., Upgradation of "hydrocarbon energy partnership" to a "comprehensive energy partnership" for renewable, petroleum and strategic reserves.
• Strengthening Bilateral Relations: Diplomatic relations between India and Saudi Arabia were established in 1947. 
  • Consequently, the Riyadh Declaration (2010) elevated ties to a Strategic Partnership.
  • Bilateral Defence Engagements: Al Mohed Al Hindi (Naval), SADA TANSEEQ (Army).
• Both Partners in Regional Maritime Security and Trade Corridor:  E.g., Indian Ocean Naval Symposium (IONS), Combined Maritime Forces (CMF), Conference on Interaction and Confidence Building Measures in Asia (CICA).

For India

• Saudi Arabia is a Key Supplier of Crude and Petroleum Products: For instance, Saudi Arabia remained India's 3^rd largest source of crude oil and petroleum products (2023–24). Also, it was the 3^rd largest LPG supplier (2023–24).
• Strong and Growing Economic Partnership: For instance, Bilateral trade reached ~USD 43 billion (2023-24). Also,Saudi Arabia is currently India's 5^th largest trading partner.
• Khaliji Capital and Investment: India aims to leverage Khaliji capital (sovereign wealth funds) for its economic growth.
  • For instance, Saudi Arabia has invested around USD 10 billion in India so far and in 2019, it announced plans to invest USD 100 billion more.
• Strengthening People-to-People and Cultural Ties:
  • Remittances: In 2024, Saudi Arabia contributed 6.7% of India's total inward remittances.
  • Religious Ties: India's Hajj quota for 2025 has increased, reflecting deepening religious cooperation.
• Counter-Terrorism and Strategic Cooperation: Saudi Arabia has consistently supported India's fight against terrorism and transnational crime. For example:
  • Facilitated arrest of Zabiuddin Ansari (2008 Mumbai attack) & deported Abdul Salam (fake currency racket)
  • Also, during "Operation Kaveri," it enabled the evacuation of 3,500 Indians from conflict-hit Sudan.
• Support for Moderate Islam and Regional Stability: Saudi Arabia's promotion of moderate Islam under Crown Prince's reforms is vital for India, given the religious and political interlinkages between the Middle East and South Asia.
  • For instance, radical ideologies from the Middle East often spill into South Asia, home to 600 million Muslims, including 400 million in India.

For Saudi Arabia

• India–Saudi Arabia Economic Relations: India is Saudi Arabia's 2^nd largest trading partner. Indian investments in Saudi Arabia have also increased in recent years, reaching a cumulative figure of approximately USD 3 billion as of 2023.
• Vision 2030 Synergy: Saudi Arabia's Vision 2030 aims to diversify its economy, and India is seen as a key partner in this transformation.

Challenges in India–Saudi Arabia Relations

• Labor and Migration Policies: Saudi Arabia's "Saudization" policy mandates local hiring quotas, limiting jobs for expatriates, including Indians.
• Trade Imbalance: In FY 2022-23, India's trade deficit with Saudi Arabia reached a record high of approximately USD 31.3 billion. 
• Delayed Strategic Projects: The proposed $50-billion West Coast refinery project, a joint venture involving Saudi Aramco, has faced delays due to land acquisition challenges and environmental clearance issues in Maharashtra. 
• Stalled Free Trade Agreement (FTA) Negotiations: Efforts to finalize a Free Trade Agreement between India and the Gulf Cooperation Council (GCC), of which Saudi Arabia is a key member, have been ongoing since 2004. 
• Geopolitical Divergences: Saudi Arabia's continued economic support to Pakistan presents a complex dynamic, given India's strategic concerns in the region. 
• Geopolitical Misalignments: India's close ties with Iran and Saudi Arabia's deepening partnership with China create strategic divergences.

Conclusion

The last decade of engagement has highlighted the growing significance of unconventional areas such as defense and security cooperation, food and environmental security, and cultural exchange, while reaffirming the importance of traditional sectors and strengthening the strategic partnership between India and Saudi Arabia.