Pranab visit likely to boost fast-growing Indo-Saudi economic ties

April 18th, 2008 - 3:31 pm ICT by admin  


By Aroonim Bhuyan
Riyadh/New Delhi, April 18 (IANS) Pranab Mukherjee arrives here Saturday to strengthen and deepen ties with Saudi Arabia, perhaps the richest and most influential Arab country. This will be Mukherjee’s first visit to the country as India’s foreign minister. The economic ties between the two sides have been growing at a steady pace in the past decade or so. The attempt is to strengthen the existing architecture for dialogue so that the two sides can have regular and candid exchanges at the political level on issues that are of concern and interest to both.

Indian officials pointed out that since this was the minister’s first visit to Saudi Arabia, a number of issues in the region, like Iran, the Middle East Peace Process as well as the Iraq war and their ramifications in the region, will all come up for discussion.

“The entire gamut of our bilateral relations will come up for discussion,” an Indian foreign ministry official said.

Saudi Arabia is one of the leading countries among Sunni Muslims and the Arab countries. It is the guardian of the two holiest shrines of Islam - and as a result has considerable influence among Sunni Muslims in different parts of the world. It has also been a key ally of the United States in the region. But now some of the developments in the Middle East and the Gulf have raised concerns among the Saudi leaders.

They have serious concerns over the possibility of having a nuclear Iran next door. They are also worried over the fallout of the war in Iraq, particularly in view of the upsurge among Shia militant groups.

In addition, the failure of the Middle East Peace Process to gather momentum has also disappointed many in the Arab world, who like the Saudis, had participated in the Annapolis initiative taken by US President George W. Bush last November.

For India, Saudi Arabia and the Gulf is extremely important. The region is one India’s main sources of energy and more than 3.5 million Indians work here. In Saudi Arabia, the Indians form the largest group after the Saudis, and the well being of the large Indian diaspora and keeping the important sea-lanes secured and free gets top priority in India’s security agenda.

Maintaining strong political ties with key members in the region, like Saudi Arabia, therefore, becomes essential for India.

Mukherjee will also try to focus on finding ways to enhance bilateral trade between the sides during his discussions with his Saudi hosts. Two-way trade increased at a significant pace after the visit of Saudi Arabia’s King Abdullah Bin Abdul Aziz to India in January 2006.

Two important agreements were signed during his visit - a Bilateral Investment Protection Agreement and a Double Taxation Avoidance Agreement. By the end of 2006-07, the value of two-way trade, including oil, stood at $16 billion - a 360 percent increase from the previous year.

India, along with China and South Korea, closely followed by Japan and the US, are the top receivers of Saudi goods and services. In 2006-07, Saudi exports to India stood at $13 billion. But Saudi imports from India are significantly lower, totalling only $2.6 billion in 2006-07.

Saudi Arabia is one the biggest markets for Indian exporters. A free trade agreement between India and the Gulf Cooperation Council (GCC) will be another important item on Mukherjee’s agenda of discussion with the Saudi leaders since Saudi Arabia is a very influential member of the GCC.

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