About Us India-Saudi Economic and Commercial Relations

India-Saudi Arabia Economic and Commercial Relations

 

  1. The Kingdom of Saudi Arabia and India share centuries old economic and socio-cultural ties. Economic ties constitute an important element of India-Saudi Arabia Strategic Partnership. The Delhi Declaration signed in 2006 and Riyadh Declaration signed in 2010 emphasized on Energy cooperation between our two friendly countries. The Riyadh Declaration committed the two sides to a strategic partnership based on complementarity and interdependence, including meeting India’s crude oil supplies and identifying and implementing specific projects in the areas of new and renewable energy. The Prime Minister visit to the Kingdom in April, 2016 and the newly proposed Strategic Partnership Council mechanism is keen on diversification of bilateral trade ties beyond the conventional oil and explore opportunities in newer areas such as Housing, Tourism, Renewable Energy, Health & Pharmaceuticals, Food Processing & Fertilizers, Engineering Goods, Mining etc.

 

Bilateral Trade:

  1. Saudi Arabia is India’s 4th largest trade partner and is a major source of energy as we import around 18 % of our crude oil requirement. During 2018-19, our bilateral trade reached US $ 34.03 billion registering an increase of 23.83 % compared to US $ 27.48 billion FY 2017-18.

 

Year

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

Trade

Indian Export

5.683

9.785

12.214

11.167

6.39

5.13

5.42

5.55

Indian Import

31.817

33.998

36.535

28.242

20.31

19.94

22.06

28.48

Total Trade

37.500

43.783

48.750

39.409

26.71

25.07

27.48

34.03

Source: DGFT, Value in US $ billion

 

  1. India’s major export items to Saudi Arabia are mineral fuels, oils and products thereof; cereals; boilers; electrical machinery and equipment; Iron and Steel; organic chemicals; meat and edible meat offal; articles of iron and steel; articles of apparel and clothing accessories etc.

 

  1. India’s major import items from Saudi Arabia are mineral fuels, mineral oils and its products; organic and inorganic chemicals; plastic and its products, inorganic chemicals; fertilizers; aluminium and its articles; iron and steel; cooper and its articles; miscellaneous chemical products; raw hides and skin (other than fur skins) and leather etc.

 

  1. Major Indian Companies such as L&T, TATAs, Wipro, TCS, TCIL, Shapoorji & Pallonji, Ashok Leyland etc. have established strong presence in Saudi Arabia. Tata Consultancy Services (TCS) opened the first all-female Business Process Outsourcing (BPO) service centre, in Saudi Arabia in 2014, aiming to provide employment opportunities to up to 3,000 women in three years. Other Indian Companies such as OYO Hotels Taj Hotels, Mahindra Susten, Bharat Forges, Paytm, Delhivery, Grofers, Policy Bazaar are currently working to enter the Saudi market.

 

Oil and Gas Sector:

  1. Oil Trade: Saudi Arabia plays an important role in India’s energy security scenario as it is India’s second largest supplier of crude oil after Iraq and largest supplier of LPG (butaine and propane). India imported 40.33 MMT of crude oil amounting to over US $ 24 billion in 2018-19.

 

Crude oil Imports in Million Metric Tonne from Saudi Arabia in the last seven years is as follows:

Year

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

Import

MMT

34.96

39.31

34.75

39.59

39.34

36.16

40.33

%

18.89

20.82

18.85

20.46

19.34

18.0

19.45

Value in US $ (billion)

29.89

30.96

21.93

13.49

13.67

15.26

24 (approx.)

 

  1. Saudi Aramco signed a Memorandum of Understanding (MoU) with “Ratnagiri Refinery and Petrochemicals Project Limited” (RRPCL), a consortium of IOCL, BPCL and HPCL, to jointly develop and build an integrated mega refinery and petrochemicals complex at Ratnagiri, Maharashtra in April, 2018. The refinery will be capable of processing 1.2 million barrels of crude oil per day. Later UAE’A ADNOC too signed an agreement in June, 2018 with Saudi Aramco to participate in the said project.

 

  1. As Saudi Arabia is looking for investment opportunities, the Saudi side has been invited to participate in the Strategic Petroleum Reserves (SPR) Programme. MoPNG has shared the terms and conditions with the Saudi side for their participation in SPRs. In addition, Saudi Aramco would be acquiring 20 % shares in RIL (worth US $ 15 billion), at an enterprise value of US $ 75 billion.

 

  1. Indian Public and private sector companies can get opportunities in different sectors of hydrocarbon like E & P, midstream, downstream, service sector and skill development.

 

Investments

 

  1. There has been an upsurge in Indian investments in the Kingdom, especially after the signing of Bilateral Investment Promotion Agreement (BIPA) and Double Taxation Avoidance Agreement (DTAA) in 2006. According to Saudi Arabian General Investment Authority (SAGIA), 322 licenses have been issued to Indian companies for joint ventures/100% owned entities as of December, 2017 of worth USD 1.4 billion in Saudi Arabia. These licenses are for projects in diverse sectors such as management and consultancy services, construction projects, telecommunications, information technology, pharmaceuticals, etc.

 

  1. However, India has not been able to attract Saudi investment to the same extend and it has been US $ 228.23 million from April, 2000 to June, 2019. Saudi Arabia holds the 3rd largest foreign exchange reserves in the world. It follows a conservative investment policy and does not disclose country specific investments. However, the Saudi Investment in India is not at par with the trade potential of the economies of our two countries.

 

  1. Saudi Crown Prince in his visit to India in February, 2019, announced that the Kingdom would be investing US $ 100 billion in the forthcoming years in diversified sectors such as energy, refining, petrochemicals, infrastructure, agriculture, minerals and mining, manufacturing, education and health. Ministry of Finance signed a MoU with the Saudi Ministry of Energy, Industry and Mineral Resources in February, 2019 to invest in India’s National Investment and Infrastructure Fund Limited (NIIF). The NITI Aayog-Saudi Centre for International Strategic Partnership workshop in Riyadh on 17-18 February, 2019 identified 40 potential projects for investments. Subsequent to the Framework Agreement signed between Invest India and Saudi Arabian General Investment Authority (SAGIA) in February, 2019, the Invest India Team visited the Kingdom twice in April and July, 2019 and held wide interactions with the major players in the Kingdom in diversified sectors.

 

  1. The Saudi Al-Fanar is setting up a 300 MW power project in Kutch of worth USD 300 million since June 2018 and the project is expected to be completed by 2020. They have also invested US $ 700 million through their Spanish subsidiary. Also, Saudi Aramco signed a MoU with the Mumabi based GumPro for setting up a drilling fluids facility on the sidelines of 2nd edition of Future Investment Initiative in Oct, 2018. SABIC, which has a huge presence in India through its US $ 100 million worth R & D Center in Bengaluru has also facilities in Gurugram, Chennai, Vadodra.

 

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