Oil, Trade, Expats: Why India Can't Risk Ties With Gulf Over Prophet Remarks
The Gulf nations are the chief source of energy imports for India, and some of its key trade partners.
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After a series of Islamic nations demanded an apology from India for the remarks of two Bharatiya Janata Party (BJP) leaders about Prophet Muhammad, India has issued a flurry of statements clarifying that the contentious remarks "do not, in any manner, reflect the views of the Government of India."
The ruling BJP suspended party spokesperson Nupur Sharma and expelled Naveen Jindal from the party's primary membership, soon after the country started receiving flak from several Gulf nations on Sunday, 5 June. The central government also assured some of the nations that it had taken "strong action" against the "mischievous elements."
India shares crucial relations, both economic and strategic, with the Gulf nations it is now embroiled in a row with – ties which it cannot risk weakening.
"The Gulf Cooperation Council (GCC) as a collective entity has tremendous significance for India," the Ministry of External Affairs notes in an older release.
The GCC countries, in addition to hosting a large portion of the Indian expatriate community, are the chief source of energy imports for the nation, and some of its key trade partners.
How Much Trade Does India Conduct With Gulf Nations?
India shares robust trade relations with the nations lying in the Gulf region, and relies on these countries for most of its energy requirements.
"The Gulf region has historical, political, economic, strategic and cultural significance for India. The GCC countries, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE, are moving ahead with their economic integration efforts and offer tremendous potential for cooperation in trade, investment, energy, manpower etc. India has traditional and friendly relation with all GCC member states," a press note by the Ministry of External Affairs from 2012 states.
The GCC had emerged as India's largest trading partner in 2010-11, and trade between the two has been flourishing since then. In 2021-2022, the two conducted trade of $154.73 billion, according to data from the Ministry of Commerce.
India's exports to the GCC have increased by 58.26 percent to about $44 billion in 2021-22 against $27.8 billion in 2020-21, as per government data. Imports rose by 85.8 percent to $110.73 billion compared to $59.6 billion in 2020-21.
How much of this trade is oil?
The share of Persian Gulf countries in India’s crude imports has remained at around 60 percent over the last 15 years, as per the Observed Research Foundation (ORF). According to Petroleum Planning & Analysis Cell, India imported 212.2 million tonnes of crude for $119.2 billion in 2021-22.
"The GCC’s substantial oil and gas reserves are of utmost importance for India’s energy needs," the MEA notes in a press release on trade with GCC.
Here's an overview of India's economic ties with some of the nations in the Gulf:
IRAQ: An important partner for India’s energy security, Iraq has remained the largest supplier of crude oil to India for the past few years. Iraq is also the seventh-largest trading partner of India. The bilateral trade amounted to $34.3 billion, of which a large part consisted of oil imports, as per data from the Ministry of Commerce.
A large number of Iraq natives visit India for medical treatment, tourism, higher education, and business.
QATAR: The total trade between India and Qatar rose to $15 billion in 2021-22.
Notably, Qatar Investment Authority (QIA), the sovereign wealth fund of Qatar, has invested USD 450 million for acquiring a 25.1 percent stake in Adani Electricity Mumbai Ltd. In April 2021, the QIA along with other investors invested USD 800 million in Indian food delivery company Swiggy.
SAUDI ARABIA: The Arab nation is the second-largest supplier of crude oil to India. The nations conducted trade of $42.9 billion in 2020-2021, as per figures provided by the Indian Embassy in Riyadh.
IRAN: From 2021-22, the bilateral trade between India and Iran stood at $1.9 billion, as per the Indian Embassy in Tehran.
Major Indian exports to Iran include rice, tea, sugar, fresh fruits, drugs/pharmaceuticals, manmade staple fibres, electrical machinery, and artificial jewellery, while major Indian imports from Iran consists of dry fruits, inorganic/organic chemicals, glassware, gypsum etc
UAE: United Arab Emirates, which emerged as India's third-biggest trade partner, conducted import-export of $72.87 billion during 2021-22, a growth of 68.3 percent from the previous year.
India's major trade with the UAE concerns petroleum products and precious stones.
OMAN: Oman, which is India's closest gulf partner, had in 2018 given India access to the strategically important Port of Duqm for military use and logistical support.
The two countries exchanged commodities worth $9.94 billion in 2021-22.
"High-level exchanges (with Oman) in recent years have helped to move forward and strengthen cooperation in key areas, including trade and commerce, defence and security, technology, health, education and people-to-people ties," as per the MEA.
Indian Expatriates & Remittances From the Gulf
Over 6.5 million Indian workers reside in the GCC countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and UAE, as per an official statement of the MEA in 2021. The UAE, Saudi Arabia, and Kuwait together account for over half of all NRIs.
According to data released by the Ministry of External Affairs in 2020, almost 13.6 million Indians live outside of India. The largest portion of this number, over 34,00,000 resides in the United Arab Emirates.
At over 7,00,000, the Indian community is the single largest expatriate community in Qatar, while Saudi Arabia is home to 2.6 million Indian expatriates. Further, Kuwait hosts 10,29,861 Indians, while Oman had 7,79,351, as per the MEA data.
According to a November 2021 report of the World Bank, India got $87 billion in foreign remittances in 2021. Of this, a sizeable portion comes from the GCC nations.
In 2018, the Reserve Bank of India revealed that over 50 percent of the remittance inflow to India comes from GCC nations.
Support From the Gulf During COVID-19
During the second COVID-19 wave in India, the Gulf countries extended quick and critical support in the form of oxygen and other medical supplies to the nation.
Oman bought 1 million Hydroxychloroquine (HCQ) tablets from India during the pandemic, while the UAE sent seven tons of medical supplies.
Further, under the Vande Bharat Mission, over 2,30,000 Indian nationals were repatriated from Gulf countries to various states in India.
"The leadership of Gulf countries took exceptional care of Indians in their respective countries and facilitated an orderly return of Indian nationals. India ensured that the supply chains of essential items to these countries were not disrupted despite lockdowns in India. Similarly, India also ensured that Indian doctors and medical professionals were able to travel to the Gulf to help in fighting the pandemic," a report by the Ministry of External Affairs had mentioned.
Ties at Risk
The relations between India and some of these nations, which go back decades, stand threatened after the row over the remarks on Prophet Muhammad erupted on Sunday.
The list of countries who have censured the ruling government in India include Kuwait, Iran, Iraq, Qatar, Indonesia, UAE, Pakistan, Saudi Arabia, Bahrain, Oman, Libya, Taliban in Afghanistan, Jordan, Turkey, and Maldives.
"Hurting our religious sentiments can directly impact economic ties," Reuters quoted an official at the Qatar Embassy in New Delhi as saying.
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