Indo-Saudi Eco & Comm Relations

1. The trade relations between India and the Kingdom of Saudi Arabia (KSA) go back to several centuries. The value of the two-way trade between the two countries in 2006-07 was $16 billion, including import of crude oil and products while the joint investment exceeds $3 billion. India’s exports to the Kingdom increased from SR 6884 million in 2005 to SR 9864 million during 2006, registering an impressive growth rate of over 43%, which was the highest among the top ten trading partners of the Kingdom. India’s imports from the Kingdom also increased by over 20% from SR 40,237 million in 2005 to SR 48,520 million in 2006. India is the 5^th largest market for Saudi goods and ranks 10^th in the Saudi imports market list and is source of around 3.09% of Saudi Arabia’s total imports.

An interesting aspect of Kingdom's exports to India is the sustained growth of its non-oil exports, which have increased from $ 463.99 million in 2001-2002 to $1264.20 million during 2004-05, registering a whopping 172% growth in the four-year period.

By exporting half a million barrels of oil per day and a total of about 24 million tons annually, the Kingdom meets nearly a quarter of India’s total of requirements.

During the visit of His Majesty King Abdullah bin Abdul Aziz Al-Saud the King of Kingdom of Saudi Arabia to India (Jan. 24-27, 2006) a 79 member strong Saudi business delegation led by Mr. Abdul Rehman Al-Rasheed, Chairman of Council of Saudi Chambers & Industry, Riyadh met their Indian counterparts. This high level visit boosted Indo-Saudi trade relations as a result there is a quantum jump of trade between the two countries from US dollar 3442.11 million in 2005-06 to US$15,946.23 million in 2006-07.

There is a vast potential between the two countries in the fields like hydrocarbons sector, power, railways, roads, telecommunications, information technology, biotechnology, pharmaceuticals, consultancy, education, tourism and tourism-related infrastructure

Year (April-March)	*Imports from Saudi Arabia	Exports to Saudi Arabia	Total trade	Indian export increase over previous year (%)
2000-2001	621.12	822.94	1444.06	10.83
2001-2002	463.99	826.43	1290.42	0.42
2002-2003	504.72	940.74	1445.47	13.83
2003-2004	737.77	1,123.31	1861.08	19.41
2004-2005	1301.15	1412.06	2713.21	25.71
2005-2006	1632.34	1809.77	3442.11	28.17
2006-2007	13,383.90	2,588.18	15,972.08	43.01

*Note: Imports figures for 2000-2001 and later do not include import of Petroleum Products

3. Major items exported by India are basmati/non-basmati rice, tea, manmade yarn, fabrics, made ups, cotton yarn, primary & semi-finished iron and steel, chemicals, plastic & linoleum products, machinery and instruments.

4. Major items imported by India apart from crude oil and petroleum products are organic chemicals, inorganic chemicals, artificial resin, plastic materials, sulphur, iron pyrites, pulp & waste paper, mineral ores & metal scrap, coal, coke & briquettes, iron & steel and non-ferrous metals.

5. Saudi Arabia is the largest supplier of crude oil to India. Both public and private sector companies buy around 23 Million Metric Tones of crude oil per annum from Saudi Aramco, which is about 26% of India’s annual crude oil imports.

6. India and Saudi Arabia regularly hold high-level meetings on energy related issues. Minister of Petroleum and Natural Gas Shri Mani Shankar Aiyar met his Saudi counterpart Engineer Ali I. Al- Naimi, Minister of Petroleum and Mineral Resources at Vienna on September 16, 2004 on the sidelines of the OPEC Seminar. In November 2000, Shri Ram Naik, India’s than Minister of Petroleum and Natural Gas attended the 7^th International Energy Forum and held discussions with Mr. Ali I. Al- Naimi in Riyadh. Mr.. Ali I. Al- Naimi attended the COP-8 meeting, which was held on October 27, 2002 in New Delhi.

7. The bilateral economic and commercial relations between India and Saudi Arabia have grown substantially in the non-oil sector and both countries view each other as important economic partners in respect of investments, joint ventures, projects on technology transfer and joint venture projects in third countries.

8. Cooperation in the field of manpower is an important dimension of the Indo-Saudi relationship. Approximately 1.5 million Indians are working in Saudi Arabia, around 85% of who are in the blue-collar workers category. Remittances by Indian workers are estimated to be over US$ 3 billion annually.

9. The Joint Commission for Economic, Trade, Scientific, Technical and Cultural Cooperation (JCM) between India and Saudi Arabia was established in 1981 held its sixth session in Riyadh on April 12, 2005. Finance Minister Shri P. Chidambaram led a five member official delegation and a 19-member business delegation from FICCI and the Saudi side was led by Minister of Economy & Planning & Acting Minister of Commerce & Industry, Mr.. Khaled M. Al-Gosaibi. During the visit, a MoU on the establishment of Joint Business Council between Council of Saudi Chambers of Commerce & Industry (CSCCI) and Federation of Indian Chambers of Commerce & Industry (FICCI) was also signed.

10. The Indo-Saudi Joint Business Council (JBC) was established in 1997 during the meeting of JCM held at New Delhi. FICCI signed a fresh MoU to establish the Joint Business Council between the Council of Saudi Chambers of Commerce and Industry (CSCCI) and Federation of Indian Chambers of Commerce and Industry during the 6^th Session of the JCM, held in Riyadh on April 12, 2005.

11. During the visit of King Abdullah Bin Abdul Aziz Al-Saud to India from January 24-27, 2006, India and Saudi Arabia signed two important bilateral agreements: (i) Bilateral Investment Protection and Promotion Agreement (BIPPA) and (ii) Double Taxation Avoidance Agreement (DTAA) at New Delhi on 25^th January 2006. These agreements are expected to strengthen the institutional arrangement required to promote and further enhancement of economic interaction between the two countries.

12. India and Saudi Arabia concluded a Bilateral Accession Agreement on Saudi Arabia's accession to the WTO on 16 June 2004 at Geneva. The Agreement included agreed tariff schedules on items of export interest for India in the Saudi Arabian market as well as Saudi Arabia's market access commitments in services sectors of interest to India.

13. India and Saudi Arabia are actively cooperating in the field of science and technology. The Council for Scientific & Industrial Research (CSIR) and the Saudi Arabian Standards Organization (SASO) has an ongoing programme of technical cooperation (POC) since June 1993. Under this programme, Indian experts in different scientific areas, particularly in the field of measurement and calibration are deputed to Saudi Arabia on regular basis. Similarly, several Saudi experts have undergone advanced training in India. National Physical Laboratory has provided expertise and technology for two important SASO projects related to calibration and teleclock system. CSIR and the King Abdulaziz City for Science and Technology (KACST) signed a Memorandum of Understanding for bilateral cooperation in 1997 and have an ongoing programme of cooperation, particularly in the field of space science, remote sensing and installation of internet.

14. India and Saudi Arabia signed five years of cooperation in the field of science and higher education during the visit of HRD Minister Shri Arjun Singh from April 17-20, 2006, envisaging exchange of expertise among other things.

Union Minister of Human Resource Development Arjun Singh and the Saudi Arabian Minister for Higher Education Dr Khaled Bin Mohammad Al Angari also singed a Memorandum on Scientific and Educational Cooperation Arrangement between the two countries during the visit.

15. India and Saudi Arabia cooperate in the field of training of agricultural experts. Indian experts were deputed to the Kingdom during 1993-98 to help Saudi scientists in the field of red palm weevil management. Saudi agricultural experts were also provided training in India in this field in 2001 at agricultural research facilities in New Delhi, Bangalore, Kasaragod and Kayamkulam.

16. Today, India has emerged as the sixth biggest foreign investor in the Kingdom with investments exceeding US $ 470 million in nearly 100 Joint ventures or 100% Indian owned companies in Saudi Arabia in different sectors such as management and consultancy services, construction projects, power, telecommunications, Information Technology, pharmaceuticals and other sectors. King Abdullah invited Indian businessmen to invest in Saudi Arabia, especially in the areas of information technology, telecommunications, mining, energy and power, pharmaceuticals, agriculture and the services sector. On its part, India would like Saudi Arabia to undertake massive investments in the infrastructure sector, including airports and railways, which require investments in excess of US$100 billion.

The joint ventures included 32 projects in Industries (SR394.46 million), 32 in the service sector (SR92.37 million) and 64 in agriculture (SR275.68 million). The Saudi Arabian General Investment Authority (SAGIA) established in April 2002 as the main licensing body for foreign investments in Saudi Arabia has awarded 190 licenses to Indian companies for Joint ventures or hundred percent Indian owned companies included 39 projects in industries, 54 in services and 93 in agriculture in Saudi Arabia. These JVs/100% foreign-owned companies were expected to bring investment of more than US $ 467.25 million in Saudi Arabia. In addition, several Indian companies are working in Saudi Arabia in the areas of construction, IT, software development, designing, consultancy, financial services, etc. Saudi investment in India also gained momentum on the strength of business opportunities emerging in its vibrant economy since 1991; they have invested US $ 228.83 million up to September 2004 in 55 Saudi-Indian joint ventures in India. A further 50 projects have been approved and are being established. These include stationery, granite slabs, asbestos, cement, trailers and computer software for health and financial sectors. Saudi Arabia is 22^nd biggest investor in India. Indian IT companies are already involved with a growing number of Saudi companies that have outsourced their IT requirements. These Indian firms have supplied high quality products and skills at a fraction of the cost of international competition.

(i) Hon'ble Shri Jaswant Singh, Minister of External Affairs visited Saudi Arabia in January, 2001

(ii) MOS (SSI), Mrs. Vasundhara Raje accompanied by 8-member SSI businessmen visited in October 5- 9, 2002.

2) Visit of Federation of Indian Exports Promotion Council (FIEO) delegation to Jeddah

4) Visit of delegation from Gem-Jewellery Export Promotion Council in December, 2007

(i) In April 2003, Deputy Minister for Industrial Affairs Mr.. Saleh E. Al- Husseini visited India with big business delegation.

(ii) A high level Saudi business delegation led by Mr.. Abdul Rahman A Al Jeraisy, Chairman, Council of Saudi Chambers of Commerce and Industry (CSCCI) visited India from 12th to 18th October, 2003.

(iii) A 5- member team from Royal Commission for Jubail and Yanbu visited India from February 1-8, 2003. Another important visit was by H.R.H. Prince Talal Bin Abdul Aziz, President of the Arab Gulf Programme for the United Nations Developmental Organizations (AGFUND) to New Delhi from 9 – 11 December 2003 to chair the annual prize giving festival of the Fund held at New Delhi to honour the winners of the Fund's

Commerce and Industry and other regional chambers like Jeddah, Riyadh, Jubail and Yanbu paid visits to India.

(v) His Majesty King Abdullah bin Abdul Aziz Al-Saud the King of Kingdom of Saudi Arabia visited Indian on Jan. 24-27, 2006. A 79 member strong Saudi business delegation led by Mr. Abdul Rehman Al-Rasheed, Chairman of Council of Saudi Chambers & Industry; Riyadh met Indian businessmen during the visit.

Indo-Saudi Economic & Commercial Relations