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India-Saudi Arabia Business Relations

Introduction

India and Saudi Arabia are old business partners: their trade relations go back tens of centuries. Today, the bilateral business ties are being steadily expanded and further strengthened by continuous interaction and cooperation, including regular exchange of business delegations. Besides being a major trade partner, India sees the Kingdom as an important economic partner for investments, joint ventures, transfer of technology projects and joint projects in third countries.

Trade

India is 4th largest trading partner for Saudi Arabia: The value of the two-way trade between the two countries in 2003-2004 exceeded US$ 6.63 billion. Saudi Arabia is the 15th largest market in the world for Indian exports and is destination of more than 1.76% of India’s global exports. On the other hand, Saudi Arabia is the source of 5.5% of India’s global imports. For Saudi Arabia, India is the 4th largest market for its exports, accounting for 5.95% of its global exports. In terms of imports by Saudi Arabia, India ranks 9th and is source of around 2.96% of Saudi Arabia’s total imports.

Trade figures for the last five years are as follows:

Indo-Saudi Trade (in million US $)

Year ( April - March)	Imports from Saudi Arabia	Exports to Saudi Arabia	Total trade	Increase in Indian exports
2002-2003	504.72	940.74	1445.47	13.83%
2003-2004	737.77	1123.31	1861.08	19.41%
2004-2005	1301.15	1412.06	2713.21	25.71%
2005-2006	1632.34	1809.77	3442.11	28.17%
2006-2007*	13383.90	2588.18	15972.08

*Note: Includes Petroleum and Petroleum products
Source: Department of Commerce, GOI.

Main Indian exports

Main Indian exports to Saudi Arabia are basmati/non-basmati rice, tea, manmade yarn, fabrics, made-ups, cotton yarn, primary and semi-finished iron and steel, chemicals, plastic & linoleum products, machinery and instruments.

India’s major imports

India’s major imports from Saudi Arabia are petroleum and petrochemical products. Saudi Arabia is the largest supplier of crude oil to India. It provides around a quarter of India’s crude exports. During 2003-04, the India’s imports of Crude Oil and petroleum products from Saudi Arabia amounted to 20 MMT worth approximately US $ 4.77 billion. Thus, Saudi Arabia meets around 26% of India’s crude requirements annually.

Indian Manpower

Contribution by Indian manpower Saudi economy is an important dimension of the Indo-Saudi relationship: 1.4 million Indians are at present working in Saudi Arabia, over 90% of whom are in the blue-collar category. These people have made immense contribution to Saudi economy, and they play an important role in strengthening the Indo-Saudi bilateral relations.

India Investment and Joint Ventures:

The bilateral investment between the two countries is growing steadily. Since mid-2000, a number of Indian firms have taken advantage of the new Saudi laws and established joint venture projects or wholly-owned subsidiaries in the Kingdom. According to Saudi Arabian General Investment Authority (SAGIA), during last two years it has issued new 82 licenses to Indian companies for joint ventures or 100% owned entities, which are expected to bring total investment of US $ 467.18 million in Saudi Arabia. These licenses are for projects in diverse sectors such as management and consultancy services, construction projects, telecommunications, information technology, pharmaceuticals, etc. Moreover, several Indian companies have established collaborations with Saudi companies and working in the Kingdom in the areas of designing, consultancy, financial services and software development.

Saudi investment in India

On the other hand, Saudi Arabia is the 22nd biggest investor in India with investments during 1991- 2004 amounting to US $ 228.8 million. There are 49 Indo-Saudi joint ventures or Saudi owned companies in India, in diverse fields such as paper manufacture, chemicals, computer software, granite processing, industrial products and machinery, cement, metallurgical industries, etc.

Indian Business delegations to Saudi Arabia

During last couple of years, a large number of Indian trade and industry delegations have visited Saudi Arabia to explore the opportunities for long-term partnerships and cooperation, including joint ventures. These delegations received warm and enthusiastic response from the Saudi business community. Indian and Saudi companies regularly take part in trade fairs in each other’s country. The important recent bilateral visits from India include Petroleum & Natural Gas Minister, Mr. Mani Shankar Aiyar from March 28-31, 2005, and Finance Minister Mr. P. Chidambaram from April 12-13, 2005 to co-host the 6th session of the Joint Commission for economic, trade, scientific, technical and cultural cooperation (JCM) between India and Saudi Arabia.

Saudi Business delegations to India

In recent times, the number of Saudi businessmen and delegations visiting India has grown substantially, indicating growing interest in emerging business opportunities in India.

India-GCC Industrial Conference

India and GCC organized a two day India-GCC Industrial Conference on 17-18 February, 2004 at Mumbai. A large number of Ministers, senior officials, industrialists and business leaders from India and the GCC states attended this first ever GCC-India Conference. The Conference provided a new momentum to the strong relations between the GCC States and India, particularly in the field of economic and commercial exchanges.

Overview

Today, Indo-Saudi business relations are growing strongly reflecting the inherent strength and complementarity nature of the two economies. The various occasions for high-level dialogue on business matters and regular exchange of delegations have established a sound basis for a constructive, mutually beneficial relationship. The outlook for Indo-Saudi business ties is very promising.

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