Will Namo spur Indo-Arab trade and infrastructure?
Saudi Arabia, unlike Narendra Modi’s other foreign visits would be quite different. The Indian PM would be walking a tricky diplomatic rope. On one hand, the PM would have to steer clear of conversations surrounding Iran or Pakistan. Secondly he faces the challenge of getting investments from an oil-rich-economy bearing the brunt of the oil-price-slump
The Prime Minister of India, Narendra Modi would be visiting the Kingdom of Saudi Arabia officially during 2nd-3rd April 2016. Salman Bin Abdulaziz Al-Saud, the King of Saudi Arabia and the custodian of the two holy mosques has invited the Indian PM for an official visit. This is the highest delegation from India, after the visit of the then Prime Minister Dr. Manmohan Singh to Riyadh during 2010. As per a release shared by the Indian High Commission in Saudi, the visit would chiefly focus on bilateral, regional and multilateral issues. The official visit would also focus on revving Indo-Arab trade and facilitating Saudi’s investments in infrastructure-related projects. India and Saudi follow a close trade relationship. Indians, close to 3 million (2.96 million), form the largest expatriate community in Saudi. The Arab nation is India's 4th largest trade partner, with trade figures exceeding $39 billion in 2014-15. Saudi is India's top source for importing oil, as one-fifth of India's oil imports come from this region. But surprisingly, Indian trade with Saudi has witnessed a slump. As per statements and figures made public on the websites of Indian Embassy, DGFT, and Ministry of Commerce, trade has severely slipped in the current fiscal year. Though currently, the trade is pegged at $39 billion, trade during the preceding year (2013-14), was almost 20% higher at $48.62 billion. The maximum rise that Indo-Arab trade witnessed was during 2011-12, with figures depicting an increase of 45.59% over the preceding year. Indian exports to Saudi chiefly constitutes product categories such as mineral fuels, plastics, fertilizers, agriculture, electric machines and equipment, iron and steel, organic chemicals, spacecraft parts, articles of apparel and clothing accessories etc. As per statistics from the Department of Industrial Policy & Promotion (DIPP) FDI statistics, Saudi Arabia is the 50th biggest investor in India with investments from April 2000 to February 2015 amounting to $53.37 million. Saudi Arabia’s direct investment in India, however, is much below potential. According to Saudi Arabian General Investment Authority (SAGIA), it has issued 426 licenses to Indian companies for joint ventures or 100% owned entities till April 2015, which are expected to bring total investment of $ 1.6 billion in Saudi Arabia. Modi’s visit would add more value than the top-level visits that Saudi and Indian counterparts have routinely exchanged in the past. Since his elevation as the PM, Modi, has engaged in infusing new investments and fine-tuning India’s foreign policy. As of March 2016, Modi has made thirty-seven foreign trips across five continents. During a visit to the G-20 summit in Brisbane during November 2014, Modi struck a personal rapport with Abdul Aziz, the then crown Prince of Saudi Arabia. The Prince, back then had referred to Modi as the “friend of friendly nations”. Modi’s visit would be focused on revving Saudi’s investments in the Indian economy, at a time when oil-price-crash has made the Gulf economies critical and wary of new investments. Bahrain for instance has cut down on many subsidies, post a rating cut by Moodys. As per October 2015, Saudi Arabia’s credit rating was cut by Standard & Poor’s (S&P) to A+, a fifth-highest classification. The rating agency averred that decline in oil prices would only increase budget deficit in an economy that accounted for 80% revenues relying on energy exports alone. Amid the gloomy picture, Modi, would be hopeful of recreating a bigger or somewhat similar announcement from that of his UAE visit. Modi had received the warmest possible reception in Dubai and Abu Dhabi by Emirates rulers as also an assurance of investment of Rs. 4.5 lakh crore by Abu Dhabi’s crown prince. While, the Indian PM has been successful from his 37 foreign meets, this one would be closely watched and scrutinized, as it would lead to a milestone in Indo-Arab trade.
March 28, 2016 | 04:38pm IST
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to success.