Global geopolitics is witnessing multiple events: from the pandemic, the US withdrawal from Afghanistan, and the ongoing war in Ukraine to the growing tensions over Taiwan. The rise of the Indo-Abrahamic block is gradually solidifying the creation of a West Asian system, establishing a balance of power against the region’s dynamic independent powers, Iran and Turkey, and stabilising the region in an era of great power competition. Against this backdrop, India and Saudi Arabia have begun to increasingly look like natural strategic and economic partners, with many growing convergences. The leadership in both countries in recent years appears determined to establish a solid partnership for mutual gains. This is clear from the significantly transformed state engagement between New Delhi and Riyadh, including the establishment of a high-level Strategic Partnership Council, the interest in increasing investment linkages in addition to already high levels of trade, and a flurry of senior-level engagement with their respective army commanders to deepen bilateral defence cooperation.
Traditionally, the complementarity of the Indian and Saudi economies has been clear. The kingdom is a key supplier of hydrocarbons—supplying 18 percent and 30 percent of India’s crude oil and LPG requirements respectively—to India, whilst the world’s second-most populous country is a major exporter of labour to Saudi Arabia, with over 2.6 million Indians working in Saudi Arabia, and over the US $8 billion flowing in as remittances annually. The bilateral trade relationship of US $42.68 billion in FY21/22 has expanded to make Saudi Arabia India’s fourth-largest trade partner whilst India is now Saudi Arabia’s second-largest trade partner.
India and Saudi Arabia have begun to increasingly look like natural strategic and economic partners, with many growing convergences.
However, the real promise in building up the economic relationship lies not in the realm of trade, but investments. Whilst the much-touted US $15 billion transactions by Saudi state oil giant Aramco to purchase a 20-percent stake in the Indian conglomerate Reliance Industries Limited’s oil-to-chemicals business was called off in November 2021 and its involvement in the US $44-billion Ratnagiri integrated refinery and petrochemicals complex project stalled in 2019, there is still no change to the very significant unlocked opportunities that emanate from the natural complementarity between the two largest economies in West Asia and South Asia. Riyadh is keen to diversify its assets both across industries and geographies, and New Delhi is desirous of greater foreign investment to continue its march as the world’s fastest-growing major economy. Both economies have now acquired significant weight, with the International Monetary Fund (IMF) forecasting nominal GDP of US$1.04 trillion for Saudi Arabia and US $3.53 trillion for India in 2022.
The Saudi sovereign Public Investment Fund (PIF) has proceeded to enter fast-growing sectors of the Indian economy with investments of US $1.5 billion in Reliance’s Jio and US $1.3billion in Reliance Retail Ventures Limited in 2020. These are not one-sided flows; media reports a few months ago indicated that one of the largest conglomerates in India, the Adani Group, is exploring the possibility of investing in PIF via a tie-up or an asset swap deal, or perhaps even by buying a multi-billion dollar stake. Links between big business in India and Saudi Arabia are increasing, with India’s other major conglomerate Reliance recently appointing Aramco’s Chairman (and PIF Governor), Yasir Al-Rumayyan, to its board. Recent domestic political events in the Indian state of Maharashtra with the return of the BJP may also see a return of the stalled Ratnagiri project.
The increased interest of PIF and Aramco in India is not random but part of a larger strategic plan, as outlined in Saudi Arabia’s ‘Vision 2030’. The document outlines ambitions for Aramco to transform from an oil company to become a ‘global industrial conglomerate’ and for PIF to become ‘the world’s largest sovereign wealth fund’. PIF has current assets under management (AUM) of approximately US $400 billion (SAR 1,500 billion), with ambitious targets of increasing AUM to US $1 trillion by 2025 and US $2 trillion by 2030. Naturally, a significant portion of the future growth of both Aramco and PIF will require much closer coordination with Asia’s third-largest economy, on track to becoming the continent’s second-largest economy by 2030. The increasing intertwining of the Indian and Saudi economies in the coming years will be an important component of the emerging bilateral partnership.
Links between big business in India and Saudi Arabia are increasing, with India’s other major conglomerate Reliance recently appointing Aramco’s Chairman (and PIF Governor), Yasir Al-Rumayyan, to its board.
Vision 2030 also identifies India as one of the eight countries chosen for a ‘strategic partnership’. The strategic arena offers even more potential for growth for the two countries than the economic realm, given its historically low base. In October 2019, Saudi Arabia and India announced the establishment of a Strategic Partnership Council which would meet regularly involving ‘the leadership at the highest level in both countries to discuss new avenues like defence, security, counterterrorism, energy security, and renewable energy. As meetings between the two sides have intensified, the fields of defence and security have emerged as ‘higher priorities’ in the bilateral relationship, with both sides interested in expanding military-to-military engagements, including joint exercises, expert exchanges, and industry cooperation to enhance overall bilateral defence cooperation. It has been nothing short of a remarkable turnaround from previous decades when Saudi Arabia was seen as a ‘strong supporter’ of Pakistani military action against India. India’s continued strategic and economic rise, coupled with Pakistan’s continuing issues around domestic political and economic crises, has resulted in a change in Saudi Arabia’s approach toward South Asia.
Coined in an essay by one of the authors, the concept of the Indo-Abrahamic refers to the growing convergence of strategic interests between India, Israel, and the United Arab Emirates (UAE) (and including Saudi Arabia and Egypt), one that would ultimately lead to the emergence of a new geostrategic coalition between them. “For a long time, India, Israel, and the UAE have maintained transactional relations. However, last year's normalisation agreements between Israel and several Arab states, including the UAE, as well as Turkey's bid to reassert its position as the leader of a Muslim order and the UAE's growing distance from Pakistan, have resulted in the formation of an unlikely and unprecedented ‘Indo-Abrahamic’ alliance’. This emerging multilateral alliance can reshape the region's geopolitics and geoeconomics by filling the gap left by the United States in the Middle East.” The author also argued that “Another critical challenge for the Indo-Abrahamic alliance is where Saudi Arabia, the heartland of Islam and the biggest Arab economy stands about the emerging geopolitical bloc. Riyadh has nurtured good relations with Tel Aviv and New Delhi and may look to this grouping as a strategic opportunity in the long run.” Saudi Arabia is a critical pillar of the envisioned Indo-Abrahamic framework because of its centrality to the Arabian Gulf's geopolitics, demography, unparalleled sway over the Muslim world, economic power, and influence over the global energy market, which correlates with the global economic growth. Saudi Arabia's inclusion in the Indo-Abrahamic framework partially relies on possible normalisation between Riyadh and Tel Aviv, which is becoming a matter of when rather than if.
Riyadh has nurtured good relations with Tel Aviv and New Delhi and may look to this grouping as a strategic opportunity in the long run.
The Indo-Abrahamic framework syncs well with Saudi Arabia’s strategic ambitions to leverage its ‘unique strategic location’ to transform into a global hub between Asia, Europe, and Africa in Vision 2030. The kingdom sees itself as being ‘at the heart of the Arab and Islamic worlds’. These goals are not simply ideological and in the abstract—Saudi Arabia desires to become a ‘global investment powerhouse’, diversifying away from oil revenues to becoming a more diversified and competitive economy. India and its vast requirements for investment, particularly in infrastructure, provide Saudi Arabia with the ideal opportunity to meet its economic goals. PIF’s current direct investments of US $2.8 billion in two Indian companies is a very small fraction of its total AUM of approximately US$120 billion that is invested outside the kingdom. The kingdom has also embarked on a transformation of its tourism sector on an unprecedented scale. Whilst much attention has been given to the US $500 billion Neom ‘mega city’ on the Red Sea, Saudi Arabia has a much larger plan that will alter how locals and foreigners alike will view travelling, working, and living in the country.
Whilst much has been made about India’s attention towards the Indo-Pacific, the South Asian country has also looked to include West Asia as part of its ‘extended neighbourhood’. Indian political leaders have significantly increased their travel to the region—India’s PM Modi recently travelled to Abu Dhabi to offer condolences over the death of the UAE’s former President Khalifa bin Zayed and to congratulate Sheikh Mohammed bin Zayed on his election as the new President of the UAE in June. Indian strategic elites have begun seeing the strong promise in the relationship—C. Raja Mohan, a leading Indian intellectual and foreign policy thinker, believes that ‘India has a huge stake in the successful economic and social modernization of Saudi Arabia’ and can benefit from the transformative reforms being pursued by the kingdom.
PIF’s current direct investments of US $2.8 billion in two Indian companies is a very small fraction of its total AUM of approximately US$120 billion that is invested outside the kingdom.
India presents itself as a solid strategic and economic partner to Saudi Arabia, as Riyadh seeks strategic autonomy and establishes itself as a global middle power. Both India and Saudi Arabia are also beginning to see that they have natural strategic convergences—wary of the rise of independent powers such as Turkey and Iran whose goal is to alter the current geopolitical lines in West Asia and seek more influence during this era of global disorder and great power competition. The alignment of Saudi Arabia and India under the Indo-Abrahamic framework is critical to the development of a West Asian system that ensures long-term peace and stability. The spiritual homelands of Islam and Hinduism have a lot of untapped potential across bilateral areas of trade and investment, immigration and culture, technology and finance, defence and maritime security, and have scope to engage in deeper coordination on regional and global agenda-setting. As the global disorder looks set to continue in the years ahead, middle and regional powers like Saudi Arabia and India look set to play a greater role in determining their destinies and their regions.
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Gokul Sahni is based in Singapore and writes aboutRead More +
Mohammed Soliman is the director of the Strategic TechnologiesRead More +