India and the Gulf Region: Building strategic partnerships

by Rahul Roy-Chaudhury

Our strategic expert delves deeper into the Gulf Cooperation Council (GCC) as India’s largest regional-bloc trading partner.

It is not often realised that when Indian Prime Minister Narendra Modi firmly placed the Indo-Pacific region at the heart of India’s engagement with the world at the IISS Shangri-La dialogue in Singapore in May 2018, he was also referring to the Gulf region. Prime Minister Modi defined this essentially maritime region as stretching “from the shores of Africa to that of the Americas”, thereby incorporating the Gulf region.

India’s historical connection with the Gulf dates back more than five thousand years, to trading between the ancient civilisations of the Indus Valley and the Dilmun (linked with present-day Bahrain). British India’s imperial interests in the Gulf were determined, pursued and administered from Bombay Presidency. The Indian rupee was legal tender in Kuwait, Bahrain, Qatar, Oman and the Trucial states – now the United Arab Emirates (UAE) – until the early 1960s.

Today, the Gulf is an integral part of India’s ‘extended neighbourhood’, both by way of geographical proximity and as an area of expanded interests and growing Indian influence. Historic maritime and cultural links have developed into strong relation- ships of ‘energy, expatriates and economy’.

Energy, Expatriates and Economy

India is dependent on the six Gulf Cooperation Council (GCC) states for 42 per cent of its overall oil imports; three of the top five oil suppliers to India are Gulf states, with Saudi Arabia, the largest, providing 20 per cent of India’s total oil imports. Qatar is also India’s dominant supplier of Liquefied Natural Gas (LNG). Any disruption in energy imports from the Gulf will have serious implications for India’s economic growth.

Indian nationals make up the Gulf states’ largest expatriate community, with an estimated 7.6 million Indian nationals living and working in the region; especially in Saudi Arabia (2.8 million) and the UAE (2.6 million). Indians number more than the local population in the UAE and Qatar. The safety and security of these Indian nationals are a key priority for the Modi government. In the past, thousands of Indian expatriates have had to be evacuated from conflict-prone Iraq, Kuwait and Yemen.

The GCC is India’s largest regional-bloc trading partner, which accounted for $104 billion of trade in 2017–18, nearly a 7 per cent increase from $97 billion the previous year. This is higher than both India–ASEAN trade ($81 billion) and India–EU trade ($102 billion) in 2017-18. Two of India’s top five trading partners, the UAE and Saudi Arabia, are from the Gulf. The GCC also provided over $37 billion in foreign-exchange remittances from Indian expatriates in 2017, accounting for over 54 per cent of India’s total. But, there is still no India–GCC Free Trade Agreement, although a framework agreement on economic cooperation was signed in August 2004. Notably, India and the UAE have recently embarked on an ambitious drive to upgrade their bilateral relations. The UAE was the first Gulf country Prime Minister Narendra Modi visited in August 2015, marking the first visit by an Indian prime minister to the UAE for 34 years. They aim  to increase bilateral trade by 60 per cent over the next five years and have set a target of $75 billion for UAE investments into India’s infrastructure development, spanning ports, airports, highways and construction, as well as petrochemical projects.

Diversification into Security and Defence Cooperation

These traditional relations are currently diversifying into security and defence cooperation, and India today has a strong and growing stake in Gulf stability. This includes ‘strategic partnerships’ with Gulf countries on issues such as counter-terrorism, money laundering, cyber security, organised crime, human trafficking and anti-piracy.

The ‘Delhi Declaration’ signed during Saudi King Abdullah’s visit to India in 2006 established a joint Saudi–Indian focus on counter-terrorism, and was followed by the ‘Riyadh Declaration’ signed in February 2010, which confirmed the upgrade in relations to a ‘strategic partnership’, and strengthened defence cooperation. Despite official Indian concerns over Saudi funding to fundamentalist Muslim institutions in India, the two countries are developing a coordinated approach towards counter-extremism. Notably, a Saudi–Indian extradition treaty and an agreement for the transfer of sentenced persons have also been signed. After considerable effort by India’s intelligence agencies, Indian national Zabiuddin Ansari, also known as Abu Jundal, the alleged ‘handler’ of the ten terrorists involved in the 2008 Mumbai terror attacks, was deported from Saudi Arabia and arrested on arrival at Delhi airport on 21 June 2012.

India’s relations with the Gulf have begun, with a fair degree of success, to encompass defence and naval cooperation, including joint exercises, regular Indian ship visits and broad-based MoUs. Gulf armed-forces personnel are also trained in Indian defence and military academies. All the Gulf states are members of the Indian Navy-conceived Indian Ocean Naval Symposium (IONS), which was established in 2008 as a biennial forum for navy chiefs of the Indian Ocean littoral. India’s most notable (but equally low-key) defence cooperation has been with Oman. India has also played an active role in enhancing the stability and security of the Gulf’s sea lanes through its participation in anti-piracy patrols off the coast of Somalia.

Key Challenges

Although India has publicly stated its interest in the Gulf region’s sea lines of communication remaining open and flowing, it has no ambition to become a US-style protector of Gulf security. This would run counter to its longstanding policy of avoiding alliances or military groups, and refraining from foreign military deployments not mandated by the United Nations. More broadly, India is loath to risk damaging its core interests in the region by seeking a conspicuously active or ambitious role.

At the IISS Manama Dialogue in Bahrain in December 2017, India’s Minister of State for External Affairs M.J. Akbar, noted the four key parameters of India’s relations with the Gulf as being non-descriptive, non-intrusive, non-judgemental and not taking sides in intra-regional disputes. This enables India to simultaneously have close relations with both Iran and Saudi Arabia, Israel and Palestine, and Qatar and Saudi Arabia/UAE/Bahrain.

However, a key challenge for India in relation to the Gulf will be to maintain its relationship with Iran amidst prospective US Trump administration sanctions. India has traditionally aimed to maintain good relations with Iran in light of India’s substantial Shia Muslim minority. In the recent past, at Washington’s behest, New Delhi reduced oil imports from Iran (previously its second largest supplier after Saudi Arabia) and voted against Iran at the International Atomic Energy Agency.

However, India’s relations with Iran have become more important following Modi’s visit to Tehran in May 2016, when a tripartite agreement was reached among India, Iran and Afghanistan to develop the Iranian port of Chabahar, with India providing $500 million towards development of the port. Once completed, this would have enable India to offset Pakistan’s denial of overland access to Afghanistan and to compete with Gwadar port in Pakistan, which is being developed with Chinese support as part of the China-Pakistan Economic Corridor. But, this project will need to be finely balanced by the possibility of US President Donald Trump’s first visit to India as the Chief Guest at India’s Republic Day parade on 26 January 2019.

Rahul Roy-Chaudhury is Senior Fellow for South Asia at the International Institute for Strategic Studies (IISS) in London.

2018-09-24T10:33:11+00:00August 23rd, 2018|2017/2018, Global Edition – August 2018|

About the Author: Rahul Roy-Chaudhury