India in the Gulf: Time to join the big leagues

While President Joe Biden’s visit this week aims to redress perception, GCC regimes are expected to continue diversifying their options and several countries are already jostling to fill that void. This presents India with an opportunity

Since 2015, Prime Minister (PM) Narendra Modi has led a campaign to consolidate bilateral ties with Gulf countries with impressive results. Thanks to our voracious appetite for crude, India’s trade with the Gulf countries crossed $175 billion in 2021-22; their cumulative investments in India reached $16 billion, and Indian investments in the United Arab Emirates (UAE) are estimated at over $80 billion. Our nine-million-strong diaspora in the region remits home around $50 billion annually. Indians are the largest tourist group visiting Dubai. The recent Comprehensive Economic Partnership Agreement (CEPA) with the UAE is expected to catalyse bilateral ties. Similar agreements with the Gulf Cooperation Council (GCC) and Israel are in the works. We have managed to de-hyphenate Pakistan from our Gulf ties.

According to a 2021 International Energy Agency (IEA) report, India will be the main driver of rising energy demand over the next two decades, accounting for 25% of global growth. By 2030, India’s oil import bill is expected to double to about $181 billion. Against this backdrop, India’s future energy security ordains us to get into the senior economic league in the Gulf. (Satyabrata Tripathy/HT Photo)

However, a more granular and comparative analysis comes up with some hard facts. Barring the diaspora and crude purchases, we remain a minnow in the Gulf eco-space. The Gulf states’ total Sovereign Wealth Funds are at $3,644 billion with India’s share at 0.5%. Despite our construction workers’ domination, India has a negligible share of the $1.9 trillion infrastructure projects pipeline planned across the six GCC states. Except for a token presence in the UAE, our status as the second-largest Gulf crude buyer does not translate into either upstream assets or downstream joint ventures. Despite being the second-largest buyer of Qatar’s gas, our companies have not yet been offered any share in the $30 billion North Field expansion project. In 2020, GCC states imported goods worth $414 billion, giving us a market share of around 10%, largely due to rice and other commodities.

According to a 2021 report, India will be the main driver of rising energy demand over the next two decades, accounting for 25% of global growth. By 2030, India’s oil import bill is expected to double to about $181 billion. Thus, India’s future energy security ordains us to join the senior economic league in the Gulf. For this, India needs a more comprehensive Gulf strategy intertwining political, economic and security strands. From the hard power perspective, the Gulf regimes’ mega-economic ventures are largely driven by their political and security considerations. Fortuitously, the current flux presents us with a rare opportunity to reset our Gulf policy. Gulf oil exporters are flushed with petrodollars, the United States (US) president has overcome his demurral to pay his first visit to the region this week, triggering a geostrategic regional realignment.

Until a decade ago, GCC states relied on a regional Pax Americana, under which Washington ensured stability and security in the region in return for oil, and investments. This compact has attenuated and the Gulf monarchies do not see the Democratic White House as a reliable partner. While President Joe Biden’s visit this week aims to redress the perception, GCC regimes are expected to continue diversifying their options and several countries are already jostling to fill that void. This presents India with an opportunity to up its game with greater willingness and agility to support these regimes politically, particularly in defence and security domains. We must have clarity on the terms of engagement, side-step both intra-Gulf frictions and avoid disrupting the existing powerplay. The I2U2 (Israel, India, UAE and the US) grouping and the Middle East Air Defence Alliance could allow us an elegant upgrade in the region.

On the soft power side, too, a lot is required. Despite growing engagement, we lack Gulf-focused economic platforms and think tanks. We require a more effective capacity to monitor the Gulf’s evolving economic landscape, identify emerging bilateral opportunities and crystalise our options to engage the concerned stakeholders. For instance, studies are needed to identify emerging mega-economic opportunities for India in post-sanctions Iran and post-conflict reconstruction in the region. Additionally, greater public-private partnership is indispensable for converting the possibilities into mega projects. An image makeover and revival of the historic people-to-people links are also called for. As the recent controversy over Prophet Mohammed showed, we lack an autonomous capacity to engage in public diplomacy with the Arab masses. Despite Indians being the largest foreign community in the Gulf, we have a paucity of shared socio-cultural platforms such as cultural centres, movies, publications and TV. This needs to be remedied urgently.

Mahesh Sachdev is a retired Indian ambassador and an ArabistThe views expressed are personal