The Indian economy is lately been riding on the high horse of improving export numbers, some of which can be attributed to the ongoing geopolitical conditions and some to the recent trade agreements with many other countries. Weakening trade ties with any such country is the last thing that the Indian economy needs right now, and after the BJP leaders’ anti-Islamist comments fiasco, India needs to avoid a #boycottindian goods campaign at all costs.
It is well known that the trade ties between India and the Gulf countries has only recently been picking up after a brief gap and today, India shares close ties with most countries in West Asia, especially the Gulf Cooperation Council (GCC). Some of these nations are India’s biggest export market. The comments made by the BJP leaders last week have been strictly condemned by Saudi Arabia, Libya, the United Arab Emirates (UAE), Indonesia, Kuwait, Qatar, Bahrain, Iran, Yemen, Oman, and other Islamic nations. The Organisation of Islamic Cooperation — the collective voice of the Muslim world — has also rebuked the remarks.
As a result, Indian ruling government has been on an extreme diplomatic firefighting mission to save ties with these countries. It is evident that India is heavily dependent on the GCC to meet its energy needs, among other trade commodities, and the fact that around 13 crore Indian nationals currently work in the GCC countries also cannot be ignored. Indians make up almost 1/3rd of UAE’s entire population and some of the major restaurants and retail businesses in the Gulf are owned by Indians. This means that a #boycottindiangoods campaign could bring serious damage to Indian owned businesses in the Gulf. Therefore, the Indian government has been prompted to take the Gulf protests and backlash pretty seriously.
India’s trade with the 6 GCC countries has considerably improved during the FY21-22 owing to the increasing economic harmony. Overall, India’s exports to the GCC have increased by 58.26% in 2021-22 against USD 27.8 billion in 2020-21, according to data from the Ministry of Commerce. The share of these six countries in India’s total exports has risen to 10.4% in 2021-22 from 9.51% in 2020-21. Similarly, imports rose by 85.8% to USD 110.73 billion compared to USD 59.6 billion in 2020-21. The share of GCC members in India’s total imports rose to 18% in 2021-22 from 15.5% in 2020-21. Bilateral trade has increased to USD 154.73 billion in 2021-22 from USD 87.4 billion in 2020-21.
The Gulf countries rely on India especially for their food and cereal imports, along with other key imports like Rice, Buffalo Meat, spices, marine products, fruits, vegetables, sugar, apparel, and electrical equipment.
India also has a big import basket from West Asia and out of the total imports from the region, nearly 2/3rd share is occupied by petroleum products. 1/5th of India’s total crude oil imports is met by Iraq, followed by Saudi Arabia and the UAE at 18% and 10%, respectively. Other import items include fertilisers, chemicals, gems & jewellery, and plastics.
Under the newly concluded Comprehensive Economic Partnership Agreement between India and the UAE, total trade is expected to reach USD 100 billion by 2026. India and Oman have also agreed to undertake a joint feasibility study, before going ahead with a preferential trade deal on limited goods. Similarly, India is set to begin deeper engagements with GCC countries to finalise a free trade agreement with the group of nations.
Qatar’s investment in India since March 2020 has multiplied by 5 times. In April 2021, Qatar Investment Authority, the sovereign wealth fund of Qatar invested 800 million USD in Swiggy. Few months later they also invested 175 million USD in Rebel Foods Pvt Ltd.
Similarly, during the pandemic air and sea connectivity was established between Kuwait and India, and Kuwait provided India with oxygen cylinders, concentrators, ventilators and other medical supplies.
In October 2019, Prime Minister Narendra Modi and Saudi Arabia’s Crown Prince Mohammed bin Salman signed the Strategic Partnership Council Agreement, which institutionalised strategic relations between India and Saudi Arabia.
India also receives foreign direct investments (FDI) from GCC member countries, wherein USD 12.22 billion was received from the UAE, USD 3.2 billion was received from Saudi Arabia and USD 488 million from Qatar during April 2000 to March 2022.
India and Iran also have regional connectivity projects including Shahid Beheshti Terminal, Chabahar Port and International North-South Transport Corridor. India was also an importer of crude oil from Iran for a long time until the US sanctions on Iran were put in place.
Recently, a 36-member delegation from the Gulf countries also arrived in Srinagar to explore investment opportunities in the Union Territory. The delegation included top businessmen from real estate, hospitality, telecom, EXIM, along with a member of the royal family of Sharjah.