Beyond oil and gas: India must look to West Asia with a new vision and mission

India must augment science and technology transfer and research cooperation in space with nations like Saudi Arabia, Israel, UAE, Bahrain and Qatar, writes  Aneek Chatterjee for South Asia Monitor

Aneek Chatterjee Jun 07, 2021
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Oil and Gas

For long India’s diplomacy with West Asian countries was hostage to mainly two issues - energy, including crude oil; and maintaining a clean lens through which Arab nations viewed India. Admittedly, these were very important issues for Indian foreign policy mandarins in the past and the present; but new opportunities have arrived with the onset of globalization and the recent pandemics, to view India–West Asia relations in a new light. 

For its strategic location, and huge oil reserves, West Asia is one of the most important regions for Indian foreign policy. West Asia connects three continents - Asia, Africa and Europe - and countries in India’s immediate neighborhood, like Pakistan and Afghanistan.  It is the world’s largest oil-producing region accounting for 32 percent of world production, 44 percent of global crude oil exports and 47 percent of the world’s proven oil reserves. Therefore, India will have to look towards West Asia for its energy requirements; although the country has been searching for some more oil destinations, due to political volatility in the region. But this submission wishes to go beyond oil, and search some other areas of cooperation to strengthen further India’s relations with West Asian nations, which has remained cordial since ancient times.

Trade in non-oil Items 

Among new areas of cooperation, trade in non-oil items should be given more priority. India’s total trade volume with 13 West Asian countries in monetary terms was USD 154.86 billion till April 2020. Bahrain, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Oman, Qatar, Saudi Arabia, Syria, UAE and Yemen make these 13 countries on the list. Of them. only five nations - UAE, Saudi Arabia, Iraq, Qatar and Kuwait - together accounted for more than 90 percent of India’s total trade volume with West Asia. These countries were among the top oil exporters to India. 

Therefore, it was discernible that oil constituted the bulk of the total trade India had with West Asian countries in 2020, pushing other items of trade to the background. It is precisely here that Indian diplomacy needs to think new. India must think in terms of exporting more items other than the traditional ones like Basmati rice; textiles; gems and jewelry; meat; organic chemicals; capital goods etc. Items like tea, leather, medicine, automobile, information technology (IT) related products and services, engineering goods, fruits and vegetables, flowers, to name a few, should be shipped in greater quantity to West Asian nations. While some items like automobiles, capital goods, medicine are currently exported, these do not form the bulk of Indian exports to West Asia.

A sizeable number of blue-collar workers from India are employed in different West Asian states, many in the infrastructural development sectors. But very few Indian companies, government or non-government, are engaged in the massive infrastructural development projects currently undertaken by many countries in the region. When it comes to building infrastructure, West Asian nations look to European, American, Japanese and recently, Chinese companies. But many Indian companies are doing excellent infrastructural development work within the nation and in some neighboring countries of South Asia. They should try to enter this lucrative market in West Asia.

India is one of the largest producers of medicines and vaccines. But surprisingly enough, India’s medicine diplomacy with West Asia is not strong. Many nurses, especially from the south Indian states, work in the medical sectors of West Asian nations; but India’s presence in medicine-related trade with West Asia needs a boost. In the pandemic-ridden world, medicines and vaccines provide ample trade opportunities. As a leading producer of medicines, India should explore this segment vigorously soon.

Another overlooked area of Indian export to West Asia relates to IT-related products and services. Indians often revel in the glory of their expertise in IT software and personnel. But when it comes to the export of these products and services to the world, West Asia is hardly visible in the overall picture, unlike the US and European countries. India must endeavor hard to boost exports of IT-related products and services to West Asia. The same recommendations apply for items like tea, vegetables, fruits (fresh and dry) and flowers.

Value Chains

However, increasing the number of export items also demands the creation of effective value chains. In today’s world, trade and business must keep in mind developing and sustaining value chain systems. India must also try to build and nurture value chains in trade with West Asian countries. 

Currently, India has a deficit trade balance (when the value of imports is higher than the value of exports) with two big West Asian nations, Saudi Arabia and Iraq. With Saudi Arabia, out of a total trade volume of USD 33.09 billion till April 2020, Indian imports comprised USD 28.5 billion. Therefore, India had a huge deficit of USD 23.91 billion in trade with Saudi Arabia. India’s trade deficit with Iraq during the same period was USD 21.9 billion.

However, with smaller nations like Israel, Yemen, Libya, Syria, Lebanon, India had a trade surplus (when exports outweigh imports). But it must be kept in mind here that India’s total trade volume with these countries is quite small compared to countries like Saudi Arabia, Iraq, or UAE. With Yemen, Lebanon, Libya and Syria, India’s trade volumes were less than USD 1 billion for each country till April 2020. With Israel, the total volume of trade was only USD 4.95 billion during this period. These data substantiate the view that India must concentrate on exporting more items to West Asian nations, and in some cases, import more also, to achieve stronger trade relations.

New visions of cooperation

Apart from augmented trade, strong security relations with West Asian countries also provide bright prospects for future engagements. Recently, India enhanced security engagements with Israel. According to Indian Ministry of External Affairs (MEA) sources, India imports defense technologies from Israel and there is close cooperation between the armed forces of the two nations. Cooperation in other areas of science and technology and space research is on the rise.

India is also trying to develop close security relations with Saudi Arabia, with whom India shares a cordial relationship. A joint naval exercise between the two countries was scheduled for March 2020 but had to be postponed due to the pandemic. India has many defense agreements with Saudi Arabia and UAE. However, there is vast scope for more defense and security-related cooperation between India and many West Asian nations.

India must augment science and technology transfer and research cooperation in space with nations like Saudi Arabia, Israel, UAE, Bahrain and Qatar. Security segments of relations offer several untapped areas of engagements, like trade in defense equipment; cooperation in civil nuclear technology; space science; anti-terrorism; more joint exercises of militaries and peace-building projects in the region. Therefore, in the third decade of the new century and after, India must look to West Asia with a new vision and mission, beyond just oil and gas.                    

Note: 1. All trade figures from Statista Research Team; online sources: https://www.statista.com. Accessed on 2nd June 2021.

2. MEA Documents used: ‘India – Israel Bilateral Relations’; ‘India – Saudi Arabia Bilateral Relations’, ‘India- UAE Relations’; online sources: http://www.mea.gov.in. Accessed on 2nd June 2021.

(The writer, an analyst on international relations, served as professor and head of political science at Presidency University, Kolkata, India. The views are personal. He can be contacted at akchatjee@gmail.com)

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