Explained: Amid Prophet row, why PM’s UAE visit seeks to bridge the Gulf

Prime Minister Narendra Modi is likely to visit UAE amid the backdrop of diplomatic tensions between India and the Gulf countries. As per Telangana Today, the Prime Minister’s Office is said to have finalised the itinerary and the visit could be part of his visit to Germany, where he will be participating in the G7 summit. Let’s take a closer look at why India’s relationship with the Gulf countries matters: Oil and gas As per Indian Express, India’s embassy in Riyadh, the Gulf Cooperation Council (GCC), which was established in 1981 and comprises Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the UAE “has emerged as a major trading partner of India” and has “vast potential as India’s investment partner for the future. The GCC’s substantial oil and gas reserves are of utmost importance for India’s energy needs”. As per the Observer Research Foundation till April, more than 84 per cent of India’s petroleum demand, which included crude oil and petroleum products, was met with imports. The 239 million tonnes of oil petroleum imports were worth $77 billion, and accounted for nearly one-fifth of the country’s total imports last year. India sourced crude oil from 42 countries in 2021-22, up from 27 countries in 2006-07, the ORF noted. However, the “top 20 sources of India’s oil imports consistently accounted for over 95 per cent  of India’s oil imports and the top 10 countries accounted for over 80 per cent  in the last 15 years”, it said. “The share of Persian Gulf countries in India’s crude imports has remained at around 60 per cent   over the last 15 years.” [caption id=“attachment_10780821” align=“alignnone” width=“640”]  Representational image. ANI[/caption] In 2021-2022, the largest exporter of oil to India was Iraq, whose share has gone up from 9 per cent in 2009-2010 to 22 per cent. Saudi Arabia has accounted for 17-18 per cent of India’s oil imports for over a decade. Kuwait and UAE remain major oil exporters to India. Iran used to be the second largest oil exporter to India in 2009-2010, its share went down to less than 1 per cent  in 2020-21, due to US sanctions. Another industry expert said the GCC’s substantial oil and gas reserves are of fundamental importance for India’s energy needs and New Delhi can support GCC in meeting its food security requirements.

India also receives foreign direct investments (FDI) from GCC member countries.

FDI worth $ 12.22 billion was received from the UAE during April 2000 to March 2022. It was $ 3.2 billion from Saudi Arabia and $ 488 million from Qatar in the same period. Trade Saudi Arabia was India’s the fourth-largest trading partner last fiscal. Total trade between India and Saudi Arabia too has increased to about $ 43 billion in 2021-22 from $ 22 billion in the previous fiscal. [caption id=“attachment_10792811” align=“alignnone” width=“640”]  Representational image.[/caption] Two-way commerce with Qatar rose to $ 15 billion in 2021-22 from $ 9.21 billion in 2020-21. Bilateral trade with Kuwait has jumped to $ 12.3 billion in 2021-22 as compared to $ 6.3 billion in the previous financial year. The prime minister is focussing on the UAE for good reason – it is India’s third-largest trading partner and critical to New Delhi’s interests on trade and business. In February, India and the UAE signed the Comprehensive Economic Partnership Agreement, which the Indian Ambassador to the UAE called a “pathbreaking pact which will unleash the economic potential between India and the UAE. The CEPA is likely to boost trade between India and the UAE from $60 billion to $100 billion in the next five years, the ambassador told PTI. In recent years, bilateral relations between India and the UAE have strengthened in all areas, and both sides have embarked upon a comprehensive strategic partnership with Modi visited the UAE in 2015, 2018 and 2019 while the Crown Prince of Abu Dhabi visited India in 2016 and 2017. In 2019, Modi received the UAE’s highest award, the ‘Order of Zayed’ conferred upon him by the UAE leadership. Ministerial visits between the two sides have also continued, including three visits of the external affairs minister and a visit of the commerce and industry minister to the UAE in 2021. “Trade relations between both the UAE and India have reached a point where both the economies can immensely benefit from each other offering tremendous business opportunities. The current year will witness huge investments from the UAE into India and vice-versa,” Aman Puri, Consul-General of India in Dubai, told The Print. As per Telangana Today, the UAE is the only country from the Gulf region to sign a free trade agreement (FTA) with India which focuses on several areas from defence to investments to space to energy deals. The UAE is also the second-largest export destination of India after the US. Mumbai-based exporter and founder chairman of Technocraft Industries India, Sharad Kumar Saraf said the GCC has emerged as a major trading partner for India and there is also huge potential for increasing investments between the two regions. [caption id=“attachment_10792861” align=“alignnone” width=“640”]  Prime Minister Narendra Modi’s visit to UAE.[/caption] “The trade relation is bound to grow in the coming years. Reasons for the growth include anti-China sentiments, increasing quality of domestic goods and improvement in international trade. A quantum jump will come when the trade pact will be operationalised properly,” Saraf said. The top five product categories which were exported from India to GCC countries during 2021-22 included petroleum products; pearls, precious and semi-precious stones; premium metals and articles of imitation jewellery; electrical machinery and equipment; sound recorders and reproducers; television image and sound recorders; iron and steel; and organic chemicals. The main imported goods included petroleum products, premium metals, imitation jewellery, fertilisers, chemicals and plastics. Deep ties, huge Indian diaspora As Joydeep Sengupta notes in Khaleej Times, India’s ties with the Arabian Gulf and peninsula date back to several millennia. “Numerous Indian sailors, merchants, intellectuals and men of faith had crossed the Indian Ocean and there was a free-flowing exchange of navigation skills, barter trade, and material and spiritual beliefs.” Over eight million Indian expatriates work in the six Gulf Cooperation Councils (GCC) countries, including over 3.5 million and 3 million in the UAE and the Kingdom of Saudi Arabia (KSA), respectively, as professionals and blue-collar workers over the past four decades, Sengupta noted. Their contribution of over $35 billion in annual remittancees accounts for an estimated one-third of India’s crude oil import bills. For all these reasons, the government of Prime Minister Narendra Modi will be eager to soothe over any hard feelings in Gulf nations. With inputs from agencies