India is enhancing ties with GCC countries through economic collaboration.
India’s foreign policy, characterized by maturity and self-assurance, is deftly navigating its normalization process with Israel while steadfastly supporting the Palestinian cause. Simultaneously, India is deepening its engagement with the Gulf nations, particularly those within the Gulf Cooperation Council (GCC)—Saudi Arabia, UAE, Oman, Qatar, Bahrain, and Kuwait. These countries not only meet nearly half of India’s energy needs but are also home to 9.5 million Indians, representing the largest diaspora of overseas Indians. Additionally, they contribute about a third of India’s annual remittances, now amounting to $125 billion. This makes them a critical partner, ranking as the second largest market for Indi an exports and a significant source of capital inflows. Ever since India took the initiative in 2001 with Foreign Minister Jaswant Singh’s visit to Saudi Arabia (where the GCC is headquartered), there has been a positive shift in relations. The Riyadh Declaration of bilateral cooperation, signed in 2010 during Prime Minister Manmohan Singh’s visit, followed the Delhi Declaration of 2006, which occurred when the King of Saudi Arabia had visited India.
Amongst other fields, both declarations emphasized the cooperation in counterterrorism and de fence. The practice of holding the annual GCC-India Indus try Ministers’ Conference, initiated in 2004, helps iden tify new areas for economic collaboration beyond energy. Following Prime Minister Modi’s strategic engage ment with the Gulf nations since August 2015, bilateral agreements with individual member states have been pursued. Since then, Modi has made a dozen visits to the Gulf countries (excluding Kuwait), successfully build ing a personal rapport with the heads of each of the five GCC countries. The recent bonhomie, combined with a focus to reinvigorate bilateral com mercial ties have begun to pay off. The Gulf nations no longer blindly support Paki stan based on shared reli gious beliefs. Instead, they have been collaborating with India on various geopolitical issues besides counterterror ism. This growing solidarity has led them to regard the Kashmir issue as “an inter nal matter of India,” a stance articulated by the UAE in March 2019 during an Or ganisation of Islamic Coop eration meeting it hosted. This perspective, diverging from Pakistan’s attempts to internationalize the dispute, has caused frustration in Islamabad. As GCC members progress toward greater religious tolerance and embark on numerous social reforms, they now demonstrate an explicit preference for engaging with a stable and secular India rather than a politically and economically volatile Pakistan.
UNITED ARAB EMIRATES
Comprised of seven adjacent emirates, with Dubai, Abu Dhabi, and Sharjah being the three major ones, the United Arab Emirates (UAE) has emerged as a country of recent disproportionate significance in the Gulf. It hosts a third of the 9.5 million Indian workers in the Gulf, who now annually remit back $25 billion, accounting for 20% of India’s remittance receipts. With an investment stock of $15 billion in India, the UAE ranks among the top 10 investors. Its bilateral trade with India stands at $60 billion, making it India’s third-largest trading partner. Following a summit between Crown Prince of Abu Dhabi Sheikh Mohammad bin Zayed, the de facto ruler of UAE, and Prime Minister Narendra Modi in February 2022, a common vision statement was issued—it outlined areas of cooperation, covering significant future relationship aspects in climate change, renewable energy, green hydrogen, advanced technologies, food security, and establishment of an Indian Institute of Technology in Abu Dhabi. India and the UAE have in 2022 signed a Comprehensive Economic Partnership Agreement (CEPA) to re move import duties on 90% of the goods traded between the two nations. This agreement sets ambitious targets to increase the merchandise trade to $100 billion and services’ trade by $15 billion within next five years. Building on its past pacts with ASEAN countries, India ensured the inclusion of a permanent bilateral safeguard mechanism and strictly defined the rules of origin. The agreement also envisages promoting bilateral investment-flows.
During a 2016 visit to India by the Crown Prince of Abu Dhabi, the Abu Dhabi Investment Authority and Mubadala, UAE’s sovereign wealth funds, had commit ted to invest $75 billion in India’s infrastructure. In January 2022, at the India UAE Investment Summit held in Srinagar, several UAE businesses announced ventures, including a shop ping mall in Srinagar, a major inland container port, a multimodal logistics facility, and a food processing facility. UAE became the first country to sign a regional connectivity pact for the ambitious India-Middle East Europe Economic Corridor (IMEEC). This multi modal corridor bypasses the Suez Canal and the other straits amenable to frequent disruptions, besides serving as a counterbalance to China’s Belt and Road Initiative. It would enhance India’s energy security, given its heavy reliance on the Middle East In 2022, UAE also commit ted to creating further capacity in India’s strategic petroleum reserves. A significant investment in a giant Indian refinery is under negotiation. To hasten the pace of commercial ties, the additional concerns of the UAE and other Gulf nations to be ad dressed are the slow pace of land acquisition, the continuance of major overseas investment projects despite changes in federal and provincial governments, and revisiting the restrictive SEBI guidelines for sovereign wealth funds. Additionally, the details of the broader envisaged defence cooperation need to be reduced to writing.
QATAR
Another GCC country with sizeable bilateral trade with India is Qatar, which is India’s largest supplier of LNG and LPG under a 20 year agreement signed in 2004. Recently, PM Modi’s visit resulted in its extension by another 25 years. Qatar is a major destination for Indian expatriates, hosting 835,000 Indian workers and supporting 15,000 Indian businesses. In 2007, the two nations had signed a Memoran dum of Understanding on labour, employment, and manpower development, further strengthening their ties. Additionally, Qatar has pledged to invest $35 billion in India’s petrochemical sector. Security and defence cooperation, particularly in naval matters including joint naval exercises, have been areas of collaboration since 2008. The Indian Navy, known for its profes sionalism and robustness in the Gulf region, offers tech nical and training assistance to all regional navies. Qatar, along with the UAE and Saudi Arabia, has shown interest in acquiring India’s advanced Brahmos missile system. Qatar has remained large ly neutral on the Kashmir issue, refraining from com menting on India’s abroga tion of Article 370, despite Pakistan’s pressure on Is lamic countries. This neu tral posture underscores the nuanced diplomatic re lations between Qatar and India. A recent decision by the Emir of Qatar to pardon eight former Indian naval officers accused of spying and sentenced to death can be seen as a result of frequent summit-level engagements between him and Prime Minister Modi.
India needs to systematically advance this relation ship. Encouraging and facilitating Indian companies to expand their operations, including manufacturing there is critical. Simultane ously, India should leverage its soft power besides en hancing counterterrorism and military cooperation. Capitalizing on its geo graphical proximity, superi or medical care, and afford ability, India can appeal to middle-class Qataris seek ing quality healthcare. The allure of alternative medical treatments like Ayurveda, homeopathy, and yoga con tinues to attract traditional ists. Moreover, India’s stan dardized pharmaceutical products are likely to find a receptive market among both the Indian diaspora and the local population. With the youth population in the Gulf rapidly increas ing, India could expand the number of seats available in its vocational and profes sional institutes for students from GCC member -states. This would assist local gov ernments in preparing their youth for well-paid, high value-added jobs and enable them to play a more signifi cant role in both domestic and global economies.
OMAN
In 2003, when India internally decided to be a nation with influence across the Indian Ocean, the Arabian Gulf, and all of Asia, its bilateral ties with Oman, a GCC member state of 4.5 million people and a sizeable Indian population, steadily began to grow. In fact, Indian Army and Navy teams have been deployed there since the 1970s to assist in train ing of the Omani forces, with access to the Thumrait air base and the Salah naval port. The formal defence MOU signed in 2018 further solidified this relationship, granting the Indian Navy access to the strategic port of Duqm. This move signi fies Oman’s strategic pivot away from Pakistan, with the country openly criticiz ing Pakistan’s promotion of terrorism. Oman, along with Saudi Arabia, Bahrain, Qatar, and the UAE, con demned the 2016 terrorist attack in Uri and has maintained a neutral stance on Kashmir. The country has expressed willingness to further build these defence and strategic ties. Allowing the Indian Navy to use the port of Duqm sup ports its patrolling efforts in the Indian Ocean, particu larly in light of the Chinese military base in nearby Dji bouti. This development is consistent with India’s doc trine of integrating strategic collaboration as the fourth dimension of cooperation, alongside economy, energy, and expatriates. Presently, cooperation is focused on counterterrorism, defence industrial development, and maritime security. After a degree of stabilization of the Iran and Israel situations, the strategic partnership can be expected to acquire more concrete content. Oman, situated at the mouth at the Strait of Hor muz—the narrow opening of the Persian Gulf between Oman and Iran —is crucial for India’s energy security due to its strategic vulner ability. One-third of the world’s maritime oil trade passes through this choke point, and any disruption could severely impact oil dependent nations like India. In December 2019, India and Oman entered into a significant agree ment on regional transport to broaden their presence in the Western and South ern Indian Ocean, the Gulf, and East Africa, aligning with New Delhi’s Indo-Pa cific vision. The signing of a multidimensional pact in January 2021, covering po litical, energy, defence, trade and investment, security, space, mining, cultural, and consular fields, has rapidly elevated Oman as a crucial strategic partner for India. A CEPA to double the mutual trade from the current $12.5bn in five years has been negotiated and readied for signing post the Indian general elections.
EGYPT
Though located in North Africa and strictly speaking outside West Asia, Egypt is an important player in the Middle East. Besides having a border with both Israel and Palestine, its strategic geographical positioning, vast landmass, and substantial population of 110 million underscore its importance. Historically, Egypt’s civilizational strength, as well as ac companying wealth have accorded it a prominent place on global platforms. Since the days of non alignment, India’s foreign policy focus in the Middle East has prominently included Nasserist Egypt, partly because, like India, Egypt leaned towards the Soviet Union during the Cold War. Additionally, Egyptian President Nasser’s opposition to the formation of an Islamic bloc, which India feared could be exploited by Pakistan against it, played a key role. Nasser’s stance prevented the Arab League from unequivocally condemning India and siding with Pakistan during the 1965 India-Pak war. In 1956, Pandit Nehru robustly defended Egypt’s nationalizing of the Suez Canal and opposed the “Triple Aggression” resolution against Egypt proposed at UN by Israel, Britain, and France. With Nehru’s passing away and Egypt’s defeat by Israel in 1967, bilateral relations began to sour.
The situation was further complicated under the pro-American President Anwar Sadat of Egypt, and Prime Minister Indira Gandhi who aligned more closely with the Soviet Union. The 1974 strategic partnership with Iran, while also importing significant amounts of crude oil from Iraq, further strained relations with Egypt. In 1979, Egypt was expelled from the Arab League for signing a peace treaty with Israel, at a time when India was doubling down on its support for the Palestinian cause. Till the early 1980s as well, the economic relationship between India and Egypt was significant. Egypt’s strategic location, with well developed ports on the Mediterranean Sea and the Suez Canal at the northern tip of the Red Sea, established it as a prime trading and tourist hub. This positioning offered connectivity to the entire African continent, West Asia, and Southern Europe. However, in the 25 years following President Sadat’s tenure, Egypt has experienced political instability, marked by several attempts at military coups. Growing threat from the Islamic Brotherhood and administrative mismanagement have further deteriorated the situation—the national debt has soared, foreign ex change reserves have sharply depleted, inflation is 35% per annum, and currency devaluation is an ongoing issue. Yet, Egypt continues to assert its significance in Middle Eastern affairs vis-a-vis Israel, though it supports a two-nation solution. It facilitates the passage of millions of Gaza refugees through its northern borders towards safer places. In November 2023, Egypt, along with the United States, Qatar, Hamas, and Israel, successfully negotiated a temporary cease fire and is currently engaged in securing a more enduring peace. India, with its expansive market, domestic purchasing power, and strategic position for entrepôt trade, can play a vital role in rein forcing bilateral economic ties. Additionally, as India endeavours to enhance its influence in regional and global geopolitics, it can offer Egypt multifarious support.
GCC: AN AREA OF PROMISE It is no secret that the GCC member states are actively looking to diversify their economic engagements be yond Western markets to wards those of India, Japan, Korea, and China. This mutual interest has laid a solid foundation for the growth of commercial ties extending beyond the energy sec tor. The GCC members have shifted their stance on Pakistan, moving away from traditional support despite religious congruences, and have instead elevated their relationships with India to political and strategic partnerships. This departure from the zero-sum approach with Pakistan in relation to India and the Gulf states should strengthen India’s ties further. Additionally, with the GCC being the largest source of energy supplies and bilateral trade nearing $170 billion, there’s a substantial scope for expansion. Capital flows, already significant, are poised to increase. This mutual interest has garnered the attention of most Gulf nations, presenting India with an opportunity to capitalize on these emerging prospects.
Dr Ajay Dua, a development economist, is an ex-Union Sec retary, Ministry of Commerce and Industry