The last decade has been marked by marked growth in trade and economic ties between India and Saudi Arabia. The time is just right to give this economic partnership a significant upgrade. Image Credit: Shutterstock

Over the past 10 years, India and Saudi Arabia have significantly strengthened their economic ties, transforming their bilateral relationship into a robust partnership. This evolution reflects a strategic alignment of interests, driven by economic diversification, energy security, and geopolitical considerations.

As both nations navigate the complexities of a rapidly changing global landscape, their economic partnership is poised for a deeper collaboration.

Bilateral trade between India and Saudi Arabia has surged, with Saudi Arabia becoming one of India’s largest trading partners. In 2021, the trade volume between the two countries exceeded $34 billion. India imports a significant portion of its crude oil from Saudi Arabia, ensuring its energy security. Conversely, India exports a wide range of goods to Saudi Arabia, including refined petroleum products, chemicals, and agricultural products.

A series of high-level visits and strategic agreements have solidified the partnership. The signing of the India-Saudi Arabia Strategic Partnership Council Agreement in 2019 marked a pivotal moment, institutionalising co-operation across various sectors. Additionally, the Saudi Vision 2030 initiative aligns with India's economic aspirations, fostering collaboration in areas such as infrastructure, renewable energy, and technology.

Big-ticket energy alliances

Energy, of course, remains the cornerstone of the bilateral relationship. Saudi Arabia meets a significant portion of India’s energy needs. The collaboration extends beyond oil, with JVs in petrochemicals and renewable energy projects. The Ratnagiri Refinery and Petrochemicals project - a joint venture between Saudi Aramco, Abu Dhabi National Oil Company (ADNOC), and Indian companies - exemplifies this.

Saudi investments in India span diverse sectors, including real estate, healthcare, and technology. The Public Investment Fund (PIF) has made significant investments in Indian companies, particularly in the technology and e-commerce sectors. Similarly, Indian companies have increased their presence in Saudi Arabia, contributing to the Kingdom's economic diversification efforts.

The future of India-Saudi Arabia economic ties appears promising, driven by mutual interests and strategic initiatives. India's focus on innovation and digitalisation presents opportunities for collaboration in these areas. Ventures in technology, AI, and fintech are likely to emerge as key drivers of the bilateral relationship.

Renewables too can be a good JV fit

Renewable energy is poised to become a significant area of cooperation. Saudi Arabia's ambitious renewable energy targets, coupled with India's expertise in solar energy, create a fertile ground for joint projects. Initiatives such as the International Solar Alliance (ISA), co-founded by India, offer a platform for collaborative efforts in solar energy deployment and research.

Infrastructure development presents another avenue for collaboration. Saudi Arabia's infrastructure projects align with India's own priorities in this space. Indian companies can contribute to these projects through their expertise in construction, engineering, and technology.

Geopolitical considerations also play a role in shaping the future of the bilateral relationship. Enhanced economic ties can serve as a foundation for deeper strategic cooperation, addressing mutual security challenges and fostering regional peace.

The exchange of human capital and cultural ties further strengthens the relationship. With a significant Indian expat community in Saudi Arabia, people-to-people connections enhance mutual understanding and goodwill. Collaborative initiatives in education, healthcare, and skill development can further enrich this aspect of the relationship.

Renewable energy, infrastructure development, and geopolitical synergy will be key areas of future collaboration. The strong foundation of mutual interests and strategic alignment ensures that the India-Saudi Arabia economic partnership will continue to flourish, contributing to the prosperity and stability of both nations.