India and Saudi Arabia are expected to sign
mega deals in energy and infrastructure to put meat in strategic partnership
when the Gulf kingdom’s Crown Prince, Mohammed bin Salman, visits New Delhi on
On his maiden trip to India as the Crown Prince, Salman is expected to announce investment proposals in key sectors as Saudi Arabia aims to increase its economic footprints in India that currently remain low, people familiar with the matter indicated to ET.
India will try to impress on the Crown Prince to reduce the Asian premium on crude oil imported by India, which if Riyadh agrees to will help the government keep fuel prices stable in an election season, one of the people said. He is also travelling to China, Malaysia and Pakistan in his maiden Asian trip in his current capacity, as Saudi aims to create global footprints and keep economy well oiled.
Saudi Arabia’s investments in India remain relatively low despite its financial clout and the upward trajectory of Indo-Saudi political ties. But Riyadh is planning to invest in India’s energy sector in a big way. India and Saudi are expected to deepen strategic partnership in areas including security, counter-terror, defence and economy.
Saudi Aramco, the national petroleum company, signed a $44-billion deal in April 2018 with an Indian consortium to acquire a 50% stake in Ratnagiri Refinery & Petrochemicals Ltd. UAE-based ADNOC, too, signed an agreement to pick up 25% of Saudi Aramco’s share in the Ratnagiri project.
After a meeting between Prime Minister Narendra Modi and the Crown Prince in Buenos Aires last November, the two nations had decided to set up a mechanism for promoting Saudi Investments across energy, defence, food security and manufacturing sectors over the next 2-3 years.
The Crown Prince is learnt to have informed the Prime Minister on that occasion that Saudi would be finalising an initial investment into India’s National Infrastructure Fund. He also referred to the prospects for investment in technology, agriculture and energy sectors.
Modi had then urged the Crown Prince on the importance of stable and predictable energy prices and some discussions had taken place between the two leaders on how Saudi could contribute to and help stabilise the energy prices, particularly for India.
Saudi Arabia is India’s fourth largest trade partner, after China, the US and the UAE.
“Saudi Arabia is a major source of energy as we import around 17% of our crude oil requirement from the kingdom. In 2017-18, the India-Saudi bilateral trade increased 9.56% to $27.48 billion. During this period, our imports from Saudi Arabia reached $22.06 billion, registering an increase of 10.5% over the previous year ($19.97 billion), whereas our exports to Saudi Arabia reached $5.41 billion, registering an increase of 5.88% over the previous year ($5.11 billion),” according to a foreign ministry document.
The current bilateral trade (April-October 2018, provisional figures) is valued at $19.64 billion. Saudi Arabia was the 15th largest market in the world for Indian exports, and the destination to 1.85% of India’s global exports in 2017-18. It was also the third largest source of India’s global imports.
For Saudi Arabia, as per 2017 data, India was the fourth largest market for its exports, accounting for 8.88% of its total shipments. In terms of imports, India ranked seventh and was the source of around 4.13% of its imports.
According to the Saudi Arabian General Investment Authority (SAGIA), there were 322 Indian companies operating as joint ventures or wholly owned entities, worth $1.4 billion, in the kingdom in December 2017.
These companies worked in projects in sectors such as management and consultancy services, construction, telecommunications, IT and pharmaceuticals.
Saudi Arabia ranks 48 in terms of India-bound investments between April 2000 and June 2018 with a funding of $208.38 million. Saudi petrochemical giant SABIC set up its R&D unit in Bengaluru with an investment of more than $100 million in November 2013. Saudi-headquartered Al-Fanar is executing a 300mw power project in Kutch. Many other companies have invested in India through their non-Saudi subsidiaries. Source: The Economic Times, Feb 12, 2019