Politics of India relations with the Gulf may be strained about the insulting remarks made by members of India’s ruling Bharatiya Janata Party (BJP) towards the Prophet Muhammad, but the jury is still out on whether the tensions will affect the economic relationship that has developed. to new heights in recent years.
Bilateral trade between Asia’s third-largest economy and the six-member Gulf Cooperation Council (GCC) countries – including Saudi Arabia and the United Arab Emirates – has increased significantly in the financial year ending March 2022, reaching $150 billion according to government data. India’s exports to the Gulf reached nearly $44 billion, up 58% year-on-year, and the country imported nearly $111 billion from the region, up 85%.
Under India’s trade agreement with the UAE, which came into force last month, the total value of bilateral merchandise trade is expected to grow to more than $100 billion and services trade to more than $15 billion within the next five years. 5 years.
This and other moves such as investments in Indian businesses by sovereign wealth funds of Saudi Arabia and the UAE are seen as the maturation of economic ties between India and the Gulf, apart from the financial sector. oil sector and remittances for decades.
However, hashtags like #BoycottIndiaProducts and #Stopinsults_ProphetMuhammad are trending on Twitter and Facebook in Gulf states after two BJP spokespeople were reported late last month. offended the Prophet and his wiferaised concerns about possible economic impacts.
Boycott each other?
It doesn’t help when some Indian goods pull off the shelf in the supermarket in Kuwait. In total, dozens of countries, including Bahrain, Indonesia, Jordan, Maldives and the UAE, joined Afghanistan, Iran, Kuwait, Oman, Qatar and Saudi Arabia in making formal complaints to the Indian government.
The call for a boycott of Indian products followed calls from several regions in India to boycott Gulf-based airlines like Qatar Airwaysaccording to media reports.
“The problem is with the image [of India] and narrative,” said Happymon Jacob, professor of international relations at New Delhi-based Jawaharlal Nehru University (JNU).
“At the political level, the damage seems to have been contained, no disagreements were exchanged between the two sides,” he said.
But Gulf countries will watch the ongoing protests in India over insults to the Prophet and see how Government of India deal with them.
“If India is said to be going after the protesters in the country with a heavy hand, it could create a negative narrative against India in the long run and could affect the economic relationships,” Jacob said.
Talmiz Ahmed, a former Indian ambassador to Saudi Arabia, Oman and the UAE agrees that the economic impact of the comments by current BJP members who are former ambassadors could be felt for some time.
“Joint ventures between companies, for example, the recruitment of jobs is done by private companies or private individuals… not government to government. Bay Area partners might say: ‘We don’t know what kind of people’ [from India] Ahmed said.
Looking West
JNU professor of international trade Biswajit Dhar says that economic interdependence between India and GCC will save time.
“The two regions are economically dependent on each other, so it is difficult to find substitutes and substitutes,” said Dhar. “They may be wary of developments in India, but I don’t think it will escalate beyond this point.”
Ironically, the controversy erupted just as India was working to improve its relationship with the GCC, seeing it as an export market as well as a source of investment in areas such as infrastructure and startups. Karma.
The initiative to rebuild India’s relations with the Gulf – dubbed the “Look West” policy – is led by Prime Minister Narendra Modi, who has visited several countries in the Gulf and West Asia. and host their leaders in New Delhi.
Importance of the Gulf
Ask any Indian diplomat about the relationship between India and the Gulf and they will tell you the two regions have been economically and culturally linked for centuries.
In recent decades, these relationships have been defined by India’s energy needs, security concerns and large expatriate Indian diaspora.
India imported 212.2 million tonnes of oil, worth nearly $120 billion, in the financial year ending March 2022. Of this, more than 60 percent came from the Gulf, including Iraq and Saudi Arabia. Ut is the top two suppliers. India also imports natural gas from Qatar, its largest LNG supplier, which accounts for more than half of India’s LNG imports.
Of the 32 million Indians abroad, 8-9 million are in the Gulf and they send back about half of all remittances. Overseas Indians sent back $83 billion in remittances in 2020 and are expected to send back $87 billion in 2021.
“Yes, the region is extremely important for India,” said Dhar of JNU.
From a security perspective, the Gulf states that once backed India, Pakistan, have realized the potential in India – billed as “the engine of growth in Asia” – a government official familiar with the matter said. The India-GCC trade system said, those who do not want to have been named.
“The strength and promise of the Indian economy is something that all these countries have seen and they want to establish a relationship with us,” the person said.
Renewing economic relationships
In addition to the traditional areas of cooperation – energy, security and the Indian diaspora – the Gulf and India are looking at new areas of cooperation.
During his February 2019 visit to India, Saudi Crown Prince Mohammed bin Salman $100 billion potential investment commitment in energy, infrastructure, agriculture, education and health, etc.
Some of that may be ongoing.
The UAE and Saudi Arabia are among the top five sources of foreign direct investment in India for 2020-2021, after Mauritius, Singapore and the United States, with the UAE sovereign wealth fund as the Authority. Investment Abu Dhabi will participate as an investor in India. quasi-sovereign wealth fund, National Infrastructure and Investment Fund. Similarly, the Public Investment Fund of Saudi Arabia and Mubadala Sovereign Asset Fund of the UAE has also invested in Indian companies.
According to Pramit Pal Chaudhury, visiting colleagues at the Ananta Aspen Center based in New Delhi, India working on “a new relationship around investment, technology and high-end Indian exports… is beneficial… much more for India”.
New Delhi also hopes to bring in Gulf businesses to invest in Indian-administered Kashmir. India has been pushing for fuller accession to the region and quelling an uprising against its control – especially since it stripped the region of its autonomy and brought it under the rule of law. direct rule of New Delhi in August 2019.
‘Deep relationship’
On the other hand, India exports wheat, sugar, fruits and vegetables to several Gulf countries and the Middle East.
For example, of the 3.2 million tons of basmati rice that India exported between April 2021 and February 2022, 2.12 million tons went to Iran, Iraq, Saudi Arabia and the UAE, the former ministry said. India’s Chief Agriculture Officer Siraj Hussain pointed out.
“India’s relations with these countries are very deep and despite their objections… their commercial relationship with India will not be affected,” Hussain told Al Jazeera.
Similarly, with hundreds of thousands of Indians using Gulf-based airlines to fly to the US and Europe, a demand to boycott those airlines could be more political than anything. other.
“The Gulf is a hub for many airlines,” said Kinjal Shah, vice president at ratings agency ICRA Ltd., “That region and the airlines there is certainly important to passengers. traveling [from India] on these [US and Europe] routes,” she said.
Then there’s the new one gather of India, Israel, the UAE and the US, with a focus on technology, connectivity, innovation and commerce. The foreign ministers of the four countries met for the first time last October. Next month’s first summit of the leaders of the four countries was announced by the White House on Tuesday.
With so many threats, India and the Gulf states will try to avoid entering a downward spiral, said CU Bhaskar, an analyst with the Policy Research Association, a think-tank in New Delhi. in relationship.
“All parties will proceed with caution,” he added.
