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Modi in Saudi Arabia: Upping the ‘Look West’ Game

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Modi in Saudi Arabia: Upping the ‘Look West’ Game

India’s Look West policy received a fillip with Prime Minister Narendra Modi’s recent visit to Saudi Arabia.

Modi in Saudi Arabia: Upping the ‘Look West’ Game
Credit: Indian Ministry of External Affairs

India’s policy focusing on West Asia (the Middle East) has witnessed an incremental resetting since 2014 when the Modi government came to power. However, the bricks and mortar had been laid before. Even as the previous Congress government focused more on the “Look East” policy, West Asia was viewed as a potential source of economic and cultural engagement. This understanding could be seen in the stoic silence by New Delhi following the 2011 Arab uprisings. For example, India abstained on the vote to impose a no-fly zone over Libya. A similar approach was seen in the wake of Syrian uprising. While New Delhi did approve UN sanctions, it opposed any attempts at regime changes and distanced itself from any military strikes.

Since the Modi government came to power, there has been a greater focus on regional powerhouses such as Saudi Arabia, UAE, Israel, and Iran. Modi’s personal diplomatic outreach has reaped dividends with countries in the region, sending out signals of camaraderie. Between 2018 and 2019, Modi was honored with high civilian awards from West Asian countries such as the UAE, Saudi Arabia, Palestine, and Bahrain.

This article looks at India’s West Asian relations – areas of cooperation and remaining issues — through the lens of Modi’s most recent visit to Saudi Arabia.

Modi’s recently concluded visit saw him speak at the Future Development Initiative (FII) in Riyadh. It was his second visit to Saudi Arabia in the last three years; more broadly, he has visited eight West Asian countries since 2014. During the visit, the Saudi Kingdom announced investments of $100 billion in India. The timing of the visit and the announcement is particularly crucial, as it took place against the backdrop of India’s revocation of Article 370 in Jammu and Kashmir, which had left Pakistan appealing for diplomatic international support.

Ties with India are important for Saudi Arabia, which has been working on diversifying its largely oil-based economy to manufacturing, technology, and tourism. There has been strong support to bringing about several cultural as well as business reforms in the recent past in the country. These reforms include easing restrictions on foreign direct investment, promoting the Saudi tourism and entertainment industry, cutting water and power subsidies, and undertaking an anti-corruption campaign. In the Ease of Doing Business global rankings Saudi Arabia is now ranked 62, with the most improved score over the past year. On the societal front also, the Kingdom has ushered in several reform measures. Restrictions were eased on women driving or traveling without a male family escort, and public film screenings were allowed as well as public musical performances.

Despite interest on both sides in diversifying relations, energy remains the driving force. India imports 85 percent of its oil needs, two-thirds of which come from the Gulf. Saudi Arabia, Kuwait, and Qatar in particular have been vital suppliers of hydrocarbons. India is thus watching intently the emerging geopolitical dimensions in the region between Iran and Saudi Arabia. Drone attacks and other tensions can drive up energy prices for India and can even hamper continuous supply. Apart from diplomatic moves to forestall any damage to its oil supply, India is attracting investments from countries such as Saudi Arabia in Indian oil companies, wind power projects, and petro-chemical industries. Saudi state-run oil company Aramco’s recent bid to purchase 20 percent of India’s largest refinery is an attempt by both sides to ramp up energy ties.

With ties largely remaining energy-based, not much was done in the area of investment in the past. However, that is changing. Saudi Arabia and the UAE are going to jointly develop the world’s largest greenfield refinery in Maharashtra, India. Both West Asian countries have pledged to invest in India in the areas of infrastructure, petrochemical, refining, minerals, and mining. In addition, in 2019 DP World Dubai agreed to invest in the construction of the $10 billion Mumbai-Pune hyperloop project. The region’s investors are also showing confidence in Indian startups. In 2014, Qatar invested in e-commerce giant Flipkart. Startups such as Byju, Ola, Big Basket, and Zomato have received funding from the West Asian investors.

Indian companies are also increasingly enhancing operations in the region, investing in areas including power plants, roads and highways, stadiums, gas pipelines, food processing, information technology, and entertainment L&T, Punj Lloyd, and Oyo have all poured money into the region, where Indian investment currently stands at around $5 billion.

New Delhi on its part understands the expat potential in West Asia. Since the 1970s when the oil boom began, the number of Indian migrants, largely from the southern states, has grown rapidly. By 2018, there were 8.5 million Indian migrants in the Gulf states. Remittances from the region stood at $ 36 billion in 2015-16. During Modi’s recent visit to Saudi Arabia, the Indian government agreed on integrating the e-migration system with the Saudis to safeguard employment conditions. The two countries also signed a Memorandum of Understanding to increase the quota of flights between the two countries. In the last few years several agreements have been signed for the benefit of Indian workers in the kingdom. Among them, India launched a RuPay card in three Gulf nations that will benefit not only expats but also Haj and Umrah pilgrims.

In the last few years, security cooperation has also become an important focal point in India-West Asia relations, with cooperation on counterterrorism, cybersecurity, terror financing, money laundering, and securing sea lines of communication. The Gulf nations have been used by some Indians to travel to conflict zones to join terrorist groups like the Islamic State; Gulf nations have also been used as sanctuaries by several individuals wanted in India. India’s incremental engagement on this subject has led to several extraditions. Apart from that, the countries are also organizing military exercises in the region. For example, India and Saudi Arabia will be conducting their first joint naval exercise in December 2019.

Despite growing ties, some obstacles remain. India’s relationships with some West Asian countries have historically remained on the cooler side, largely because most of the Islamic nations in the region were close to Pakistan. And on India’s part, New Delhi was skeptical of fomenting a good diplomatic relationship with Israel. During the Cold War, India publicly supported the Palestinian struggle, fearing a domestic backlash and the anger of other Islamic nations. However, after the 1990s, with Arab-Israel peace gaining traction, India also decoupled its relations with Israel from the Palestine struggle. On the other hand, India had to contend with the growing criticism from the region on the Kashmir issue while Israel showed understanding toward India’s position on that sensitive topic.

For other West Asian nations, economic and strategic interests started attaining a larger importance than the Islamic card, especially after Pakistan refused to join Saudi-led forces to fight in Yemen. This does not mean that the region does not have strong relations with Pakistan; an example on this front can be seen in Saudi Arabia pledging to build a $10 billion refinery in the Pakistani port of Gwadar. However, the countries in the region do not believe that there is any contradiction in having strong ties with both India and Pakistan.

India is also trying the same straddling strategy in its West Asian game. The U.S.-Iran-Saudi escalation, however, creates uncertainty for the future. New Delhi is caught in the game between a superpower and a strategic partner versus a great regional power that is of immense strategic value for India in the region. Initial fissures can be seen in how Iran reacted on the Kashmir issue. These different disputes between the U.S. and Iran, Iran and Saudi Arabia, and Saudi Arabia and Qatar, combined with the presence of Islamist groups along with escalating India-Pakistan rivalry, will play a role in how India’s West Asia Policy shapes up.

Dr. Shreya Upadhyay is a Senior Risk Analyst at India Bound. She has a Ph.D. in U.S. Area Studies from Jawaharlal Nehru University.