Authors: Meyitula Longkumer, Harshita Kanodia, Prekshi Singhal, Ashli Varghese
From relations dating back to almost 5000 years mainly for trade, eventually sharing literature, culture and knowledge and finally to being the “Economic Neighbourhood” of each other; India’s ties with the Arab world has evolved in the course of a paradigm shift in its development strategies. In the past years, it has renewed its focus towards the region and has engaged dynamically in the line of its national interests. Thus, adopting a balancing foreign policy in the tripolar region and has made attempts to establish independent relations with each one of them, avoiding any involvement in the regional feuds. India’s policy focuses on the commercial and economic in the region. Cooperation from both the sides has been witnessed that exhibits great diplomatic relations between the nations. This paper highlights the complexities of the relationship between India and the Arab world and provides solutions for enhancing cooperation between them. India’s stance on the political issues of the region and how it has been able to secure its economic interests has been underlined.
After the end of the Cold War, India began redefining its foreign policy keeping in view the changing realities of the external environment. It has grown dramatically since and has been successful to an extent in strengthening its international relations whilst guarding its sovereignty. Indian foreign policymakers have assimilated Nehru’s ideology of third-world solidarity. And since the developmental goals of these countries aligned quite well with those of India, the Arab world has been tagged as an important part of its foreign policy. The rich history between the Arab world and India is an influencing factor of their continued association. And with the hyper-world of globalization, this relationship has matured over time and has an enduring impact on their culture, people, and thought.
As the world is gradually moving towards a multipolar order, India must enhance its presence in the international space. With waning American leadership in the area, non-western countries are taking charge to get a solid standing in the Arab region. India has followed a pragmatic approach to boost its multifaceted relationship with the region. Nonetheless, India’s aspirations to have a strong presence in the region has been time and again challenged by Pakistan and China’s increasing activity in the region. The volatile political environment of the Arab world is also a concern for policymakers. They have strategically formulated comprehensive counter policies to safeguard its territorial integrity while ensuring energy security and other economic interests in the region.
Relations between India and the Arab worlds have a multilayer of history which can be evident since the Mughal Empire, till the most recent developments and agreements undertaken between the two regions. As Mr. Shashi Tharoor has rightly stated, “The Arab World constitutes an integral part of India’s extended neighbourhood and is a region of importance to India in political, strategic, security and economic terms.”. From cultural interactions to exchanges of ideas and scholarly advice in the fields of medicine, sciences, mathematics, in the writings in the Islamic scholarship with help of Indians, languages (many arabic words can be found in several Indian languages like Hindi, Urdu, Malayalam & Gujarati),trading historical artefacts with the Dilmun traders, having one of the oldest maritime trade relationship, indo-arab relations have been proved to be of abundant significance in the past, even so that during the first millennium,
trade with the Indian subcontinent became the economic backbone of the Arabian Peninsula . (Tharoor, 2013),(Pillamarri, 2016)
The first maritime trade route across the world as per the records was between the Indus valley civilisation and the civilisation of DILMUN (located on the island of Bahrain and the adjacent shore of Saudi). Mostly goods were traded from India to Arabia. India used to receive money that was used to purchase India’s Relations with GCC. During the Mughal Dynasty, the Mughals lauded horses brought in by the Arabs or from Iraq, even so, that Emperor Akbar had edicted special care and concern towards the horse dealer, wrote the famous author Abu’l-Fazl Ibn Mubarak in ‘Akbarnama’.(Nazer, 2013, pp. 277-284). Along with the Horse Trade, the Middle-East and India had been involved in overland trade in spices, muslins, and other commodities for over a millennium.
The Mughals had siphoned off huge amounts of wealth from the Mughal treasuries to the holy city Mecca, located in present-day Saudi Arabia, from the huge amounts of revenue collected. In this way, they established relations with the Sharif of Mecca and by sponsoring Hajj, the annual Muslim pilgrimages, provided for a direct and constant exchange between Western India and the Arabian Peninsula (Sinha, 2019). The Arab World and the Indian subcontinent also bonded over shared experiences of European Imperialism and with the upsurge in the sense of nationalism, the two regions developed a sense of fellowship and unity, between 1919 and 1939, to do away with the British Raj, and sharing emotional and ideological bonds. In 1928, countries like Egypt, Palestine and Iraq, received assurances and sympathy from the Congress in their struggle to gain independence from the Western Rule; as well as Maulana Azad established relations during the early 1920s, with frontiers of national movements in countries like Egypt, Syria & Iraq, which have resulted in long-term relationships between the regions (Ward, 1992).
The British lacked substantial control over the sea lanes, and it was one of the reasons for British control over Arab territories. Administering from the province of India, British established a protectorate over Abu Dhabi in 1820; followed by expanding the control over to Gulf Arab States like Bahrain, Oman, Qatar, Kuwait, Dubai, and states that later amassed into the United Arab Emirates (UAE). The British received garrisons from the Indian soldiers under British Rule, as well as the administrations of these Gulf States were done by the British officials in India (Pillalmarri, 2016).
Being a british colony, a large number of the Indian soldiers helped the European, Meditteranean and the middle-east conflicts in the first world war, (even so that the indian soldiers won a total of 11 Victoria Crosses) and in the battles in Iran, Syria and Iraq during the second world war. Even movements of our national struggle like the Khilafat Struggle were examples of subtle interests in the fortunes of the Arab and Islamic world.
Before the Government of India had introduced a new currency, Gulf Rupee for the Gulf States, the Indian Rupee was being used in the entire British protectorates. Independent India failed to establish a substantial economic connection with the Gulf States in a manner the British India did.
There were reports of smugglers broadening their operations, taking gold to the Indian subcontinent, returning with Indian rupees which were valid for circulation in the region and were exchanged for more valuable foreign currencies to be used by the smugglers to buy more gold. However the gigantic gold smuggling led to gargantuan depletion in the foreign cash reserves at the Indian Reserve Bank, leading to the establishment of gulf rupees which were pegged at the same value to the Indian rupees, which will be used in these regions, however the area excluding India. (Encyclopedia, 2020)
In 1966, India devalued its currency, and by that time, oil had been discovered in the Trucial States. The first Gulf state to introduce its own currency was Kuwait, which introduced the Kuwaiti Dinar on 1 April 1961 (two years after the Gulf rupees had been introduced). Four years later, on 16 October 1965, Bahrain introduced its own currency (Taryam, 2018). Following the withdrawal of the Indian currency, the Government of Bahrain introduced their coin system for a standardised coinage across the Gulf States (Asianet, 2018).
The balance of trade shifted more in favour of the Gulf states post the oil boom, as well as the newly independent India couldn’t be efficient to maintain the ties, the way India did under the English Rule, under the umbrella of the British Administration. However, with the passing of the years, as compared with other regions, despite this inability to maintain during the initial years of independence, India now maintains important relations with the Gulf states.
Fundamentals of India’s Pro-Arab Policy
Foreign policy is a dynamic process by which nation states adjust themselves to the continuity & changing pace of international realities and domestic interest. In the process, the way a state responds to such transformation is conditioned to the distinctive nature of the respective political
system. And strategies put into are the outcome of the imperatives of history, culture and geo-political constraint.
This prevalent tendency is evident from India’s foreign policy behaviour towards the Arab world. The structural dimensions and perceptions of India’s foreign policy has been heavily impacted by the struggle of independence from the clutches of colonialism. Under the leadership of Jawaharlal Nehru, the formulation of Indian foreign policy took its shape by the legacy of non-aligned movement and balance of power during the era of cold war (Edwards, 1965; Prasad, 1962). India’s objective to its foreign policies shoulders on the following five pillars (Appadoria, 1981) :
I.Promote international peace and security II.Anti-imperialist stance
III. Opposition to racial discrimination
- Domestic economic development
- Asian unity and solidarity
One can argue that these pillars might have shifted or reconstructed in the past decades but they still stand as the guiding factors in comprehending India’s foreign policy at different levels of diplomatic relations i.e. global, regional and bilateral. Or at least hear these holy grails ringing through the corridors of PMO and MEA. At the expense of clearing the clouded sky, India’s posture has been versatile like that of a yogi and highly contextual as it carries a boomerang effect on the national interest. On such lines of reasoning, it has been run-of-the-mill for India to tower Arab cause which hatched into West Asian policy, a multidimensional strategic move to redefine the foreign relations. Apart from the objectives and contextual elucidations, India’s amiable policy towards the Arab world has danced around strong determinants of leverages in the sphere of energy, economic and political essentials.
Underpinnings of commercial and geopolitical considerations, the gravity of oil, gas and hydrocarbons makes up India’s energy security acts as a push factor for India to maintain stable diplomatic relations (Tharoor, 2013). Also, food security has been less hyped up, India’s dependency on countries like Jordan, Tunisia and Algeria are suppliers of rock phosphate and potash which converts into fertilizers for Indian farmers (Tharoor, 2013). For such multiplying leverages, any state would have to tailor their foreign policy towards a region or state in a positive light. To contemplate on cutting such vital funnel of natural resources which is one of the spinal cord of India’s economy would be a recipe for disaster. Under the political and security priorities, despite India’s official stance on Kashmir, the issue has remained troublesome as Pakistan tries to drag it to the international forum. And the possible adversary effects from Pakistan’s islamic alliance (Nair, 2004). In such a room of tension, the support of Arab states in countering Pakistan became very pivotal, thereby, extending a hand to Arab cause and Palestinian matter. Even with the absence of Kashmir issue, India’s policy would be indifferent because of the historical and political links.
The presence of Indian expatriate community in the Arab states serves as a relevant factor for India’s pro-Arab policy. The community comprises more than 8 million blue collar workers facilitating remittances of over $50 billion from the region. Therefore, it is in the best interest of India to incorporate the protection of its citizens residing in the Arab states (Taneja, 2017).
As a result of the above determinants, India has transcended its partnership focus from Egypt, Iraq and Palestine to Israel, Saudi Arabia and Iran in the booklet of West Asian policy. This fundamental shift could be seen from the Indo-US partnership that played a crucial mantle during the post-cold war era. Yet, relations with different states are in a web of interdependence, India’s relation with Israel is constrained by its reliance on Saudi Arabia and Iran for energy imports whereas this relationship is constrained by India’s need to acquire defence weapons from Israel (Malone, 2015). Meanwhile, the relations have maintained its momentum with the introduction of Fast Track Diplomacy by the Modi government in 2014. Thereby increasing diplomatic visits to and from the region have strengthened the relations.
– Energy Security The growing energy needs of India poses a great challenge for the developing country. As said by Kadira Pethiyagoda, “India faces energy poverty with 25 percent of the population lacking access to electricity and the remaining facing rolling blackouts.”(Pethiyagoda, 2017). India thus, largely depends on imports for oil and natural gas and its major energy needs are catered by the gulf economies. In the last two decades, India’s import for oil products from the Middle East has increased dramatically. In 2014-15, nearly 109.88 million tons of oil were imported in India from all over the world out of which 58% was contributed by the Gulf States (Abbas ,2019).
Qatar is its largest natural gas supplier. Qatar is supplying 8.25 billion cubic meters of natural gas and Oman and UAE are exporting 0.35 billion cubic meters and 0.17 billion cubic meters, respectively (BP, 2019). India’s increasing requirements for hydrocarbons and its increased dependence on the Arab world has made India to look for options to increasingly diversify its energy portfolio. According to “Kootneeti” (Kootneeti, 2018) India has made efforts to expand its relations with Africa and Latin America specifically with Nigeria and Venezuela by investing in initiatives like ONGC (oil and natural gas cooperation) and RIL(Reliance Industries Limited) and other regions of interest being South China Sea Region, Australia and also Arctic. In spite of all this, many international affairs and administrative obstacles act as barriers for India’s aim to diversify its energy dependence and hence India continues to hang on to Arab States for its needs.
Looking forward to the Indian initiatives with the Arab World, India has also established a Strategic Petroleum Reserve (SPR) in Padur, Mangalore with the aid of UAE. Also for the setup of a refinery in Andhra Pradesh, the Indian Oil and Gas cooperation has been working closely with the Saudi counterpart which has been stalled due to land acquisition issues ( Abbas, 2019). India’s concern regarding its energy needs is dated back from the Gulf War in 1990. In 1990, after the Iraq and Kuwait invasion India was extremely affected with restricted oil supplies as at that time India’s 40% of oil imports were mainly from these two countries. Also during this time the fluctuations in the prices of crude oil in the international market were very high making it highly volatile, due to which india’s foreign exchange reserves were declining and india’s foreign currency reserve ($1.2 billion) was just enough for paying import bills of only 3 weeks.
This was a major setback for India. With the aim to solve this issue faced and to avoid such a situation again in the future the Atal Bihari Vajpayee government in 1998 decided to construct oil reserves in india.
The authority responsible for the construction of the Strategic Petroleum Reserves (SPR) is the Indian Strategic Petroleum Reserves Ltd (ISPRL), a Special purpose entity (SPE), wholly owned by the Oil Industry Development Board (OIDB) under the Ministry of Petroleum & Natural Gas. In the first stage of the development of this strategic reserves three oil storage reserves have been setup in Visakhapatnam (Andhra Pradesh, total capacity 1.33 million tonnes) , Padur ( Kerala, with capacity of 2.5 million tonnes) and Mangalore (Karnataka with capacity of 1.5 million tonnes) to provide with energy in case of any situation that leads to disruptions in supply of oil externally.
In the second phase of the SPR the Central Government is planning to create oil reserves at Chandikhol (Odisha), Bikaner (Rajasthan) and Rajkot (Gujarat) (Singh, 2020).
In February 2018, during the visit of Indian Prime Minister Narendra Modi in UAE, ISPRL and Abu Dhabi National Oil Company (ADNOC) signed an agreement under which ADNOC will store 5.86 million barrels of crude oil in India’s Mangalore SPR at its own cost thus making ADNOC the first foreign entity to store crude oil in Indian SPR. The agreement states that in any
emergency situation of oil shortage due to any reason, the Indian government can use the entire available crude oil stored by ADNOC in Mangalore SPR facility for its usage. Also giving ADNOC full right to trade part of crude oil stored at its own cost to Indian refineries during normal times (GKToday, 2018).
Amidst the ongoing situation of the global pandemic COVID – 19, the oil market has been experiencing the darkest moments in history. The oil prices fell almost by 40% in the month of March 2020 with the demand side on an exceptionally low level and thus the suppliers are finding it difficult to store the oil because of the relentless extraction, it has been one of the worst of situations for the oil industry. In spite of all this, there has been good news for a country like India. Leading OPEC producers UAE and Saudi Arabia said they will increase the output by cutting the prices, giving major customers a golden opportunity. According to an anonymous source “It is an opportune time for us and for them (Abu Dhabi National Oil Company and Saudi Aramco) to finalize the deals and fill the SPRs…If there is any delay, we might fill the SPRs on our own”. Another source told that the Indian Oil Ministry requested the Finance Ministry to sanction some money to initiate the deal of buying oil for filling up the Oil reserves in India (Verma, 2020). Thus, this fall of oil prices can be turned in favour of India’s interests but any official statement confirming this news is still awaited.
– Trade and Investment Economically, India and Arab countries are connected more deeply than ever. India calls the Gulf region their “Economic Neighbourhood”. In 2006, India’s Minister for Commerce and industry Kamal Nath stated that: “India and the member states of the Gulf Cooperation Council (GCC) have historic ties that go back not merely decades, but centuries. It is significant that the earliest contacts between the Gulf States and India were based on trade, with dhows and ships crossing the Arabian Sea. Indeed the Gulf region is part and parcel of India‘s economic neighbourhood” (Abbas, 2019).
According to a press release by FICCI (2014), the Arab League is the largest trading partner with bilateral trade worth USD 185 billion in 2014. There has been a continuous effort to raise the volume of trade ties from both sides. The India-Arab Cooperation Forum provides an institutional framework to boost trade opportunities between the two. The 4th India-Arab Partnership Conference held in November 2014 was aimed to enhance economic and business relations with a focus on exploring sectors like pharmaceutical, healthcare, IT services, food security, and infrastructure. Much emphasis was given to enhance the flow of investment from the region (Kanchi Gupta, 2014). Moreover, India and the GCC states have signed the Framework Agreement of Economic Cooperation (FAEC) in New Delhi on August 25, 2015. As per this agreement “they are working closely to establish a conducive environment for business and trade”. The Gulf countries are also granted the “ Most Favoured Nation” status by India with a hope to receive the FTA.
However, Modi government seems to be well aware of the pact on energy with the Arab States and they know that these relations need to be viewed from the perspective of strategic ties also and not only for commercial purposes. Efforts have been put to establish long term relations with the countries through joint investment plans and projects such as the SPR. Kadira Pethiyagoda had the following remarks on Modi’s 2016 visit, “During the prime minister’s April 2016 visit to Saudi Arabia, the countries agreed to “transform” the buyer-seller relationship into a deeper partnership that focuses on investments and joint ventures in petrochemical complexes, research and development, and exploration in India, Saudi Arabia, and other countries” (Pethiyagoda, 2017).
There has been a phenomenal growth in trade between India and the GCC countries since the last few years. With the imports from these countries reaching $ 79.70 billion as compared to the exports from India to these Gulf regions being at $ 41.55 billion i.e. almost half of the imports, the trades have experienced a great upthrust in FY 19 (Mathew, 2019).
Trade between these countries was prohibited to only oil, spices and labour before 2000, but since then the trade basket has been diversified exceptionally. With Crude oil, gems and jewellery, Iron & steel, minerals and fuels, organic chemicals, agriculture etc. being the main segments of the trade basket now. Almost 15% of India’s total imports are accounted by the Gulf countries and 12% of the country’s total exports in terms of value (Mathew, 2019). Saudi Arabia and UAE being the most prominent contributors in the imports from the Gulf region.
There are mounting investments by well established groups such as TATA Group, Aditya Birla Group, The Jashanmals, Taizoon Khorakiwala, Khimji Group, Mann Chabria and many more in areas of real estate, restaurants and hotels, textiles and gold. According to the Dubai Chambers of Commerce (DCC), great interest of the indian companies to invest in dubai has been observed. According to Khurram Abbas as per 2019, “38,238 Indian companies are registered, while DCC has opened its international office in India to facilitate the business community.” (Abbas, 2019). According to the embassy of india in Riyadh, Saudi Arabia 322 indian companies as joint ventures or fully owned were registered for business by 2017 as per Saudi Arabia General Investment Authority’s (SAGIA) data.
These economic ties are not only restricted to Indian private sector but also includes Indian public sector working in the Gulf regions. Tea Board of India, Bharat Heavy Electricals Ltd, Indian Airlines, State Bank of India, National Thermal Power Corporation and educational institutions have been providing their service in the region. Thus, making Trade and Investment as the major factors for good economic and political relations between India and the Arab countries is vital ( Abbas, 2019).
The volatile political environment of the Arab World in the wake of the Arab Spring has posed challenges for its relationship with India. Even though they have come closer over time, New Delhi’s response has been largely muted on political issues owing to its traditional non-interference principle. India didn’t react instantaneously during the uprisings. However, due to the huge Indian diaspora, it kept a check on the developments to ensure the safety of its people and quick repatriation (Anubhav Gupta, 2019).
The Ministry of External Affairs’ response to the uprisings in Egypt was neutral with a view of preserving vital economic interests and the need to maintain positive relations with the country. Its reaction towards Yemen and Bahrain was also just directed towards the welfare of the Indian community in these countries. Nevertheless, India’s response to Libya and Syria was quite specific, as opposed to its traditional policies due to its non-permanent status at the UN Security Council during 2011-12 (ARAS, DEMIRAĞ & SACHTER, 2015). It condemned the loss of lives and encouraged dialogue. India’s policy was not to involve directly in political matters but to work towards bringing stability gradually.
In her address to the Arab League ministers in Delhi, the former External Affairs Minister, Ms. Sushma Swaraj cleared India’s stance on the Israel-Gaza conflict (MEA, 2014). She stated that India respects the sovereignty of all states and encourages peace and regional stability. Its relation with Israel is independent of its relationship with the rest of the region and will not bring any change in its support to Palestine. And that it will continue to provide strong support for Palestine statehood at the international, regional, and bilateral levels. We observe that India has relations with different players in the region but followed a strategy that mirrors each other.
India has maintained a balancing foreign policy with the rivals in the region. India’s policy on the lines of the Non- Alignment Movement refrains it from taking sides during conflicts and avoid any “sharp choices” (ARAS, DEMIRAĞ & SACHTER, 2015). It strives to balance out its engagements with Iran and Saudi Arabia, two critical actors in West Asia. India has historic ties with Iran and continuously tries to strengthen its relations with Saudi Arabia. It has been challenging to strategically maintain a balance between these arch-rivals, in order to preserve its economic interests.
Security and Counterterrorism
Security is one of the key aspects of India’s West Asian policy, in line with its objective of having a secure maritime environment vis-a-vis the Indian Ocean. It has prominent interests in developing strategic partnerships to advance its naval capabilities. In 2008, India’s incompetent security system was exposed in the wake of Mumbai terror attacks and it began actively working towards strengthening its defense capabilities (Malone, 2015). Over the years, Israel emerged as a major defense partner of India. The arms import from Israel has risen to about 15 percent of the total between 2014-2017 and both the countries have also collaborated to jointly develop defense technology (Anubhav Gupta, 2019). India has also worked on strengthening its military ties and has signed various security pacts with Oman, UAE, Qatar, and Saudi Arabia. Rising extremism and terrorism has been a concern for India. It has attempted to seek cooperation from the region for building constructive methods to counter it. The rise of ISIS and the Indian Mujahid (IM) in the Gulf posed a threat to India’s security. Consequently, New Delhi along with its Gulf counterparts, especially UAE and Saudi Arabia, collaborated to jointly work on sharing expertise and resources to combat transnational terrorism (Siyech, 2017). India-Gulf Counterterrorism Cooperation aims to formulate comprehensive plans to monitor terror financing channels and create more vigilant immigration mechanisms (Siyech, 2017). India has also been able to persuade UAE and Saudi Arabia to condemn Pakistan’s involvement in terrorism and promote peaceful co-existence (Anubhav Gupta, 2019).
The Way Forward
In the orbit of Indo-Arab relations, there has been a change of cart from partner states to political stance of non interference taken over by strategic autonomy as the wave of energy thirsts, investment flow, defence weaponry has set the stage of an upward trajectory while maintaining a neutral stance on the political upheavals in the region. Resulting into a strategic partnership through mutual cooperation of bilateral and multilateral platforms, India has orchestrated interest in diversifying the nature of its relations with the Arab World. However, India needs to play a more active role in the region by tackling the rise of Beijing’s notable influence of the BRI and Pakistan’s islamic alliance. All these direct consequences from the gulf competition and spillover effects of it has served a challenge on the platter of India’s foreign policy.
Over the years, there has been indeed an increased engagement with regional organizations such as the Arab League, GCC, OIC. The bilateral approach with the state actors and organization seems to fit in well with India’s objectives in the region. Such as the Mumbai Declaration of the First Gulf Cooperation Council (GCC)—India Industrial Conference, issued in February 2004, indicates India’s willingness to join multilateral institutions whenever possible (Malone, 2015). New Delhi should drive trans-regionalism as a platform for long term imperatives when matters reach a certain degree of tension where cooperation with the entire arab states will need to be considered.
In the strings of interdependence as seen from the relations with different players from the Arab world, it is decisive for India to conceptualize a more harmonious and holistic development strategy so as not to hurt its domestic interest. Many critics argue that the MoU and cooperation forum which has not borne the fruits as expected by New Delhi, and the mechanisms of foreign policy needs to be polished on the dimension of soft power geared towards the nourishment of sticks and carrots. The Arab world offers ample opportunity but India’s over-centralised structure is a roadblock for successfully realizing the gains of its outreaching diplomacy. There is
a need for domestic institutional reforms and bringing fluidity in order to achieve its global economic objectives (Taneja, 2017).
If the former is achieved, we can expect India to better regulate the existing special economic zones in creating business friendly ambiance and a larger incentive for attracting investment 1 from the Arab world. This would balance the weighing machine of the energy and trade dependency. Yet, in the post-pandemic world, states would need to put economic investment and healthcare into the same box. In this occurrence, India holds the upper-right hand on the pharmaceutical industry that would be incorporated in a stronger thrust at the table of foreign policies towards the Arab world. Setting aside the structural matters, there is an increasing necessity for India to exploit its soft diplomacy – to be a source of attraction- not only to the Arab states but other countries as well.
The foreign policy makers should provide a space for open dialogues with emerging leaders. Based on its careful assessment of the developments in the region, India should regularly update its emergency evacuation plans (Abhyankar & Pourzand, 2013). There is also a need to encourage more people-to-people engagements with the Arab countries through youth exchange, scientific joint research as the young generations will be always upholding the contemporary dynamics of international relations and bringing countries to a cooperation fold.
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