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Why are economic stakes high in West Asia?

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    World Affairs
  • Published
    14th Jun, 2022


A diplomatic fallout between India and West Asian countries due to provocative and communally charged comments made by former spokespersons of a party in India.


  • Various West Asian nations such as Qatar, Kuwait, Iran, Bahrain, Oman, Iraq, Saudi Arabia and the UAE along with the 57-nation Organisation of Islamic Cooperation (OIC) and the six-member Gulf Cooperation Council (GCC) expressed strong reactions to the derogatory remarks made on Islam and the Prophet Muhammed
  • Indian officials have asserted that the government stood by the country’s traditional values and respected all religions. 
  • The Indian diplomats are also entrusted to reach out to individual OIC member states and reassure them of India’s position of an ‘inclusive’ approach to all communities.

India-West Asia Relations – Background

  • For decades, India was a passive player in West Asia – a beneficiary of good relationships with multiple actors. 
  • During the Cold War years, India maintained close economic cooperation with both Saudi Arabia and Iran, the rival poles in regional geopolitics.
  • In the post-Soviet world, the bi-directional approach has been expanded to a tri-directional foreign policy to accommodate the three key pillars of West Asia – Saudi Arabia, Iran, and Israel.
  • India adopted the Look West policy in 2005.
  • India has huge stakes involved in the region such as energy, trade, and safety of the Indian community in the region.

Significance of West Asia to India

  • India’s cultural, economic and trade ties with West Asian countries are deep and strong. 
    • Gateway to Central Asia – West Asia is also a gateway to land locked and energy rich central Asia.
    • Trade & Investment – The economic ties between India and the GCC countries are moving at a faster pace increasing the mutual interdependence
      • UAE and Saudi Arabia are India’s third and fourth-largest trading partners respectively.
    • Economic Growth – India is the largest recipient of foreign remittances from West Asia, which plays a significant role in India’s growth.
  • Energy security – 70% of India’s imported energy needs come from West Asia.
  • Starting from maritime trade, the exchange of goods, services and cultures between the people of the Gulf region including those on the western shores of the Arabian Sea and the people of India’s southern and western States has a history of several millennia and predates even the foundation of the Islamic faith.
  • The West Asian countries acted as land trade bridges to early European empires such as Greece and Rome.
  • Flourishing trade in spices, cloth, silk and indigo in exchange for gold and silver is well documented.
  • During the British colonial era, the rupee served as legal tender in many Gulf countries until the middle of the 20th century. 
  • It also said that the commercial exploitation of oil in the Gulf region during the colonial era started to alter the balance of trade flows between India and the West Asian countries
  • At present, the West Asian countries collectively account for about 16% of India’s total bilateral merchandise trade and contribute about 60% of India’s crude oil supplies. 
  • Investments from sovereign wealth funds and other large investors from the GCC have increased steadily in recent years.

Status of Indian diaspora and remittances

  • The West Asian countries are among the largest overseas jobs providers for Indians, with over 89 lakh Indians working in Gulf economies. 
  • The UAE (comprising seven emirates of Dubai, Abu Dhabi, Sharjah Ajman, Umm Al-Quwain, Fujairah and Ras Al Khaimah) houses over 34 lakh Indians and accounts for the largest percentage of NRIs in the region.
    • Saudi Arabia houses over 26 lakh and Kuwait about 10 lakh Indians. 
  • Indians are involved in a vast range of job categories in the region which include construction labor, oil industry workers, nurses and doctors, hospitality industry and finance professionals.
  • The remittances sent back home by these NRIs in 2017, accounted for about 55% of the total $68.97 billion in inward remittances received in India from across the world that year.

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