Explained: Why the Gulf matters for India

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News: Recently, the ruling BJP suspended its national spokesperson and expelled its Delhi spokesperson Naveen Kumar Jindal, following comments they had made about Islam and the Prophet.

The move came after three countries in the Gulf region had summoned the Indian ambassadors to their nations to register their protest, and demanded a public apology from India.

It underlines the significance of the Gulf region for India.

Why is the Gulf region important to India?

Barring the Jewish state of Israel, the 10 other countries of the Gulf region together account for one-fifth of the world’s Muslim population, and are among the strongest voices of the Muslim world.

  • Gulf countries – Saudi Arabia, Qatar, Iran, Iraq, Bahrain, Kuwait, United Arab Emirates, Oman, Jordan and Yemen

India shares good relations with most of the countries in the Gulf.

The two most important reasons for the relationship are – oil & gas, and trade.

Two additional reasons are the huge number of Indians who work in the Gulf countries, and the remittance they send back home.

How much trade does India do with countries in this region?

According to India’s embassy in Riyadh, the Gulf Cooperation Council (GCC), which includes UAE, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait has emerged as a major trading partner of India.

UAE: The UAE was India’s 3rd largest trading partner in 2021-2022, and 2nd largest for both exports ($28 billion) and imports ($45 billion) when these are counted individually.

Saudi Arabia: At a total volume of $42.9 billion in 2021-22, Saudi Arabia was India’s 4th-largest trading partner.

Iraq: It was India’s 5th-largest trading partner in 2021-22 at $34.3 billion.

Qatar: The total trade was $15 billion, accounting for just 1.4% of India’s total trade, but the country is India’s most important supplier of natural gas.  Qatar accounts for 41% of India’s total natural gas imports. The UAE accounts for another 11%.

How much oil does India import?

According to an analysis by the Observer Research Foundation in April, more than 84% of India’s petroleum demand, which included crude oil and petroleum products, was met with imports.

The share of Persian Gulf countries in India’s crude imports has remained at around 60% over the last 15 years.

In 2021-2022, the largest exporter of oil to India was Iraq, whose share has gone up from 9% in 2009-2010 to 22%. Saudi Arabia has accounted for 17-18% of India’s oil imports for over a decade.

Kuwait and UAE remain major oil exporters to India. Iran used to be the second-largest oil exporter to India in 2009-2010, its share went down to less than 1% in 2020-21, due to US sanctions.

How many Indians work in the Gulf, and how much remittance do they send?

According to Ministry of External Affairs data,

more than 13.46 million Indian citizens work abroad. If Persons of Indian Origin (those who have taken up citizenship of other countries, and their descendants) are added, this number goes up to over 32 million.

Counting only the 13.4 million non-resident Indians (NRIs), the Gulf has the largest numbers. The UAE (3.42 million), Saudi Arabia (2.6 million) and Kuwait (1.03 million) together account for over half of all NRIs.

In terms of remittances from abroad, India was the largest recipient in 2020 at $83.15 billion, according to World Bank data. This was nearly twice the remittances to the next highest recipient, Mexico, at $42.9 billion.

The largest contributor is the huge Indian diaspora in the Gulf

Source: This post is based on the article “Explained: Why the Gulf matters for India” published in The Indian Express on 7th June 22.

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