Current Affairs

Importance of Gulf Region

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  • Categories
    World Affairs
  • Published
    10th Jun, 2022
  • Context:

    India has hit out at the Organisation of Islamic Cooperation (OIC) over its statement condemning the comments made by two Indian leaders in retaliation to the insults on Hindu deities.

  • Background

    • The gulf region has remained important for India from the historical times. The spread of Islam and several invasions from the region has deepened the cultural collaboration between nations.
    • Apart from history and culture, it is also important to note that the oil and natural gas, two major components of India’s energy security is relying upon these gulf nations.
    • Ties have increased over the period of time between India and other nations, resulting to increase in trade volume.
    • COVID pandemic has changed the dynamics of the relation and provided a wider scope of collaboration and relation.
  • Analysis:

    What are the countries associated with gulf region?

    • Geographically the Gulf Region consists of 10 Countries:
      • Saudi Arabia, Qatar, Iran, Iraq, Bahrain, Kuwait, UAE, Oman, Jordan and Yemen
    • Cumulatively 10 states comprises of around 20% of the world’s total Muslim Population.

    Gulf Cooperation Countries:

    • 6states of the region: Saudi Arabia, Qatar, Oman, UAE, Bahrain and Kuwait
  • Why Gulf nations are significant for India?

    • Cultural relations: Gulf region constitutes for one-fifth of the total Muslim population, India being a secular state, around 14% of the Muslim population, stands at second position in Muslim community population.
    • They exchanged navigation skills, goods, ideas and belief systems.
    • Economic and trade ties: Two major pillars of India-Gulf nations ties are oil & and trade.
    • Oil Imports: The share of Persian Gulf countries in India's crude imports has remained at around 60% over the last 15 years. 
    • Energy Security: GCC countries, with large hydrocarbon reserves, are crucial for India’s energy requirements while the region has been a good market for Indian products.
    • Indian diaspora and remittances: There is a huge presence of Indians in the GCC countries particularly Saudi Arabia and UAE, in the form of skilled and unskilled workers. Remittances from Gulf nations comprise 55% of India’s total remittances (2020).
    • International treaties: Negotiations for the India-Gulf Cooperation Council (GCC) Free Trade Agreement (FTA) are in a crucial phase of talks.
      • India and GCC members are members of the FATF.
      • India has multilateral and bilateral military exercises with most of the GCC countries.
    • Strategic importance and world Politics: At UNO and Organisation of the Islam Cooperation (OIC), two largest organizations, India could gain more support and relevance from the gulf nations. At the strategic front stability of Persian gulf is essential for India’s energy security where India can enhance its strategic presence.
  • What is the present diplomatic relations with India?

    According to India’s embassy in Riyadh, the Gulf Cooperation Council (GCC), has emerged as a major trading partner of India and has the vast potential for India’s future Investments along with GCC’s oil and gas reserves are of utmost important for India’s rising energy demand.

    India’s bilateral ties with individual nations have its own significance:

    • United Arab Emirates:
      • UAE was the India’s third largest trading partner with a trade volume of $72.9 billion, after USA and China.
      • Second largest for both exports ($28 billion) and imports ($45 billion).
      • The UAE accounted for 6.6% of India’s total exports and 7.3% of imports in the last financial year.
      • Also accounts for 11% of India’s total natural gas import.
    • Saudi Arabia:
      • India’s fourth largest trading partner with a trade volume of $42.9 billion.
      • Individually the export volume to Saudi Arabia is around $8.76 billion, whereas the import from Saudi Arabia accounts for $34.1 billion, standing at fourth position.
      • Most of the imports from Saudi Arabia is dominated by crude oil.
      • Accounts for 17-18% of India’s oil import
    • Iraq:
      • Fifth largest trading partner of India, accounting for $34.3 billion of trade volume.
    • Qatar:
      • Trade volume of $15billion, 1.4% of India’s total trade.
      • Qatar has its significance in natural gas supply to India.
      • Qatar accounts for 41% of total India’s natural gas import.
  • How India’s energy security is relying upon Gulf Nations?

    • More than 84% of India’s petroleum demand is dependent on the imports.
    • Around 60% of the India’s oil imports are from Gulf nations.
    • Iraq contributes to 22% of India’s oil imports, standing at first position in oil export to India.
  • How COVID has changed the dynamics?

    • Declining oil demand: Climate change initiatives and pandemic induced lockdown has severely hit the oil demand impacting revenue collection and economic stability of the Gulf nations.
    • Diversification of economies: Reduction in the government exchequer of the Gulf nation, increased the importance of diversification of economic activities and reducing the dependency on oil economy.
    • Green and clean energy: The climate change initiative has initiated the demand for renewable and clean energy resources, like, solar energy. India being the founder of International Solar Alliance can help the gulf nations for infrastructural development for renewable source of energy.
    • Vaccine Diplomacy: Vaccine availability and vaccine equity along with health emergencies has widen the scope for bilateral ties between India and other gulf nations, emerging the importance of more collaboration in health infrastructure and development of the diaspora.
    • Strategic collaboration: COVID and Middle East crisis has impacted the power dynamics which further strengthened the scope for collaboration at International platform and reform the world politics with better representation.
  • What are the possible scopes for collaboration between the nations?

    • Water conservation
    • Food security
    • Digitization
    • Supply chain
  • Conclusion:

    In a broad historical perspective, the pandemic is a watershed event. From the debris of the ravages that it has wreaked on earlier relationships and arrangements, it is also offering opportunities to take the human saga forward into new realms that need new instruments, new operations and new mindsets. Given the five millennia-old narrative of engagement that has defined India’s links with the Gulf, the pandemic has opened opportunities to reinvent our connections on new bases, as we have been doing over several centuries.

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