INDO-SAUDI ECONOMIC-COMMERCIAL RELATIONS

Trade:

1.       The trade relations between India and Saudi Arabia go back over several centuries. India has always been one of the main trading partners of Saudi Arabia. Today also, India is 4th largest trading partner for Saudi Arabia: The value of the two-way trade between the two countries in 2002-2003 was US$ 5.10 billion. For Saudi Arabia, India is the 4th largest market for its exports, accounting for 4.84 % of its total exports. In terms of imports by Saudi Arabia, India ranks 10th and is source of around 2.73% of Saudi Arabia’s total imports. For Indian exports, Saudi Arabia is the 14th largest market in the world and is destination of more than 1.9 % of India’s exports. On the other hand, Saudi Arabia is the source of 5.5 % of India’s total imports.    

2.       Trade figures for the last six years are as follows:

            Indo-Saudi Trade (in million US $)

*Note: Imports figures for 2000-2001 and later do not include import of Petroleum Products and Crude Oil, which was approx. US $ 3.65 billion in FY 2002-03

Source: Department of Commerce, GOI

 3.       The major items exported by India include 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.       The major items imported by India, apart from crude oil, include organic chemicals, inorganic chemicals, artificial resin, plastic materials, sulphur, iron pyrites, pulp and waste paper, ores and metal scrap, coal, coke and briquettes, iron and steel, non-ferrous metals.

5.       Saudi Arabia is the largest supplier of crude oil to India. The public sector oil firms in India purchase about 10 MMT of crude per year. In addition, private Indian companies buy another 7 to 9 MMT of crude per annum from Saudi Aramco.  During 2002-2003, India’s imports of Crude Oil and petroleum products from Saudi Arabia amounted to 18.816 MMT worth approximately US $ 3.6 billion, which was around 23% of India’s crude imports during the year. 

6.       India and Saudi Arabia regularly hold ministerial-level meetings on Oil related issues. Mr. Ram Naik, India’s Minister of Petroleum and Natural Gas, visited Riyadh in November 2000 to attend the 7th International Energy Forum and held discussions with his Saudi counterpart Mr. Ali I. Al- Naimi, Minister of Petroleum and Mineral Resources. The two Ministers also met in Osaka (Japan) on September 22, 2002 on the sidelines of the 8th International Energy Forum conference. Mr. Naimi visited India in (Oct 27, 2002) to attend the COP-8 meeting held at New Delhi.

Bilateral Cooperation:

7.       India and Saudi Arabia have substantial trade relations in the non-oil sector and see each other as important economic partners in respect of investments, joint ventures, transfer of technology projects and joint projects in third countries.   

8.          Cooperation in the field of manpower is an important dimension of the Indo-Saudi relationship:  approximately 1.3 million Indians are working in Saudi Arabia, around 85% of whom are in the blue-collar workers.  Remittances by these Indian workers are estimated to be around 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.  So far, five sessions of the JCM have been held.  The last meeting of the JCM was held in New Delhi in June 1997.  The next (sixth) session of the JCM is scheduled to be held in Riyadh during March-April 2004.

10.      The Indo-Saudi Joint Business Council (JBC) was established in 1997 during the meeting of JCM held at New Delhi.  The next session of JBC is scheduled to be held in Riyadh during March-April 2004 in parallel with the JCM.

11.     A delegation of Ministry of Finance recently visited New Delhi (January 5- 9, 2004) for negotiations with Indian authorities on Bilateral Investment Protection and Promotion Agreement (BIPPA) and Double Taxation Avoidance Agreement (DTAA) between the two countries. BIPPA is in the final stages of negotiations and is expected to be formally signed soon. These agreements are expected to strengthen the institutional arrangement required to promote and further enhance economic interaction between the two countries.

12.     India and Saudi Arabia are also actively cooperating in the field of science and technology.  CSIR and the Saudi Arabian Standards Organisation (SASO) have 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 and have undergone advanced training in India. National Physical Laboratory has provided expertise and technology for two important SASO projects related to calibration and teleclock sytem.  CSIR and the King Abdulaziz City for Science and Technology (KACST) signed an MoU 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. Recently a three member delegation from CSIR, NPL and CFTRI visited SASO during January 2004 and both sides agreed to renew the POC. 

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

14.     Joint Action Plan between NSIC and JCCI: The Jeddah Chamber of Commerce signed a ‘Joint Action Plan (JAP) with the National Small Industries Corporation Limited (NSIC) of India for 'Development of SMEs in Jeddah’.  The JAP envisages cooperation in developing a policy and organisational framework for the SME sector; and deputation of Indian experts to the Kingdom for identifying suitable areas for SMEs, undertaking feasibility studies, organizing exhibitions of Indian SME products and projects in the Kingdom, and exchange of sector-specific technology and business delegations, including technology transfer.

15.     The Saudi Fund for Development (SFD), which assists developing countries in their economic development programmes by granting loans for financing developmental projects, has extended four loans worth US $ 175 million for infrastructural projects in India. 

 Investment:

16.     The bilateral investment between the two countries is growing steadily. Since the promulgation of new investment laws by the Saudi government and establishment of the Saudi Arabian General Investment Authority (SAGIA) in mid-2000, many Indian firms have taken advantage of the new Saudi laws allowing for setting up of 100% foreign owned projects in the Kingdom. Since April 2000, SAGIA has awarded 65 licenses to Indian companies for establishing Joint ventures or 100% Indian owned companies in Saudi Arabia in different sectors such as management and consultancy services, construction projects, telecommunications, IT, pharmaceuticals, etc.  These JVs/100% foreign-owned companies were expected to bring an investment of around US $ 363 million in Saudi Arabia. In addition, several Indian companies are working in Saudi Arabia in the areas of IT, software development, designing, consultancy, financial services, etc.  On the other hand, since 1991, Saudi companies have invested US $ 181 million in India and there are around 55 Indo-Saudi joint ventures in India.

17.     Round Tables to enhance Indian presence in various commercial sectors: The Mission has organized Round tables meets for developing  strategies for increasing India's participation in various areas of commercial importance, viz. Promotion of India as a tourist destination (Jan, 2002),  Enhancing India’s role in the IT Sector of Saudi Arabia’( May 2002) and  Emerging Opportunities for Indian In line with the Action Plan prepared at the Round Table on Enhancing India’s role in the IT Sector of Saudi Arabia, State Bank of India has approached Saudi Arabian Monetary Agency (SAMA) for establishing a branch in the Kingdom.

Bilateral Visits:

18.     The historic visit of Hon’ble Shri Jaswant Singh, Minister of External Affairs to Saudi Arabia from 19-21 January, 2001 broke new ground in Indo-Saudi bilateral relations, particularly in the economic field.   Thereafter important visits were those of MOS (SSI), Mrs. Vasundhara Raje in October 2002 and MOS for External Affairs, Mr. Vinod Khanna in September 2003.

19.          Numerous trade delegations under the auspices of CII, FIEO and other apex export promotion councils have visited the Kingdom with multi-product delegations and took part in exhibitions/fairs and organized buyer-seller meets during the past 3 years.  In addition, numerous individual businessmen also visited the Kingdom and established business tie-ups. Some of the important delegations which visited Saudi Arabia were:

(i)  Confederation of Indian Industry (CII): 13-member delegation from April

     13-20, 2001;10- member delegation from December 22-30, 2002; and 8

    member SSI businessmen accompanying MOS(SSI) (October  5-9, 2002). 

(ii)  Powerloom Development & Export Promotion Council (PDEXCIL):15-member                delegation from May 18-23, 2001

(iii) Gem & Jewellery Export Promotion Council of India (GJEPC): 3-member

      delegation from September 3-5, 2001 and 2-member delegation in June   2003

(iv) Synthetic & Rayon Textiles Export Promotion Council (SRTEPC):  12- member

      delegation from September 21-27, 2001 and another 33 member delegation

      during October 11-17 2002)

(v)     Indian Department of Posts (January 6-8, 2002)

(vi)    Indian Electrical and Electronics Manufacturers’ Association (IEEMA):

        12-  member delegation in May 10-17, 2002 and 10  member delegation on  

         January 17-23, 2003)

(x)      Department of Economic Affairs, Ministry of Finance, New Delhi

          (January 17-19,2003)

(xi)    Electronics and Computer Software Export Promotion Council delegation

         (April 27-may 1 2003). 

(xii)   Ministry of Petroleum & Natural Gas delegation for 2nd Executive Board & ISG Meetings of International Energy Forum (May 11 & 12, 2003) 

(iv)    Federation of Indian Export Organizations: 15 member delegation during

         delegation June 1-9, 33 member delegation during Sept 12- 21,     2003

(xv)   State Bank of India delegation (July 7-9, 2003) 

(xvi)  Engineering Export Promotion Council (EEPC) delegation (September 21-    28,           2003)

20.     In April 2003, Deputy Minister for Industrial Affairs Mr. Saleh E. Al- Husseini visited India with big business delegation.  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.  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 “International prize for pioneering development projects”. Trade delegations under the auspices of the Council of Saudi Chamber of Commerce and Industry and other regional chambers like Jeddah, Riyadh, Jubail and Yanbu paid visits to India. 

21.  The Jeddah Chamber of Commerce and Industry and the National Small Industries Corporation Limited (NSIC) signed a ‘Joint Action Plan (JAP) for NSIC’s support for Development of SMEs in Jeddah’. 

Trade fairs:

22.     The Embassy encourages Indian companies to participate in trade fairs/exhibitions in Saudi Arabia to showcase their products and services.   In September 2000, an exclusive Indian trade and industrial exhibition, India-2000, was held at Dammam, in which 26 Indian companies and local agents of some other Indian companies participated. 

23.     During last three years, Indian companies have regularly participated in the following annual Saudi exhibitions: Saudi Fashion/Leather Fair( Sept.), Saudi Build/Stone Fair (Oct.-Nov.), Saudi Elenex Fair (Electrical Engineering)(Feb.), Saudi Food, Saudi Health Care/Hospital Exhibition (Jeddah, September), Saudi Agriculture (Oct) Saudi Autoshop (Nov.),  Saudi International Oil, Gas, Petrochemical & Power Exhibition (Jan.), Saudi Building & Interiors Exhibition( Jeddah, Oct.),  Agriculture, Water and Agri-Industry Show(Riyadh, Oct.), Dhahran International Trade Fair (Feb.), Saudi Elenex (March), Exhibition on Printing, Packing and Petrochemicals (March ), Gitex (April- May), Saudi Food 2003’ Fair/ exhibition(September 13- 18, 2003), Saudi Build 2003” (Oct19-22, 2003), etc.

First GCC-India Industrial Conference in Mumbai (Feb 17-18, 2004):

24.     The first GCC-India Industrial Conference comprising ministerial and business delegations from the six member states of the Cooperation Council for the Arab States of the Gulf – UAE, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait – and India was held in Mumbai on February 17-18, 2004.  The Conference was co-chaired from Indian side by Mr Arun Jaitley, Minister of Commerce and Industry   and from GCC side by Mr Abdullah bin Abdul Rahman Al-Taweel, Minister of Trade and Industry of Kuwait  and was attended by Mr Abdulrahman bin Hamad Al Attiyah, GCC Secretary General,   Mr Mohammed Khalfan bin Kharbash, Minister of Finance & Industry, UAE, Mr Ali Saleh Al Saleh, Minister of Commerce, Bahrain,  Mr Hashim bin Abdullah Al Yamani, Minister of Commerce & Industry, Saudi Arabia, Mr Maqbool bin Ali bin Sultan, Minister of Commerce and Industry, Oman and Mr Abdullah Hamad Al Attiyah, Second Deputy Prime Minister and Minister of Energy & Industry, Qatar. The Saudi Minister of Commerce and Industry was accompanied by the Mr. Abdullah Al-Hamoudi, Deputy Minister for Foreign Trade and Mr. Saleh Al Husseini, Deputy Minister for Industrial Affairs.  The Conference was also attended by senior officials, diplomats, business leaders, captains of industry and investment houses. Among the GCC countries, Saudi Arabia provided the largest contingent numbering over 50 delegates to the Conference, who included prominent personalities like Dr. Fahad Al-Sultan, Secretary General of the Council of Saudi Chambers of Commerce and Industry; Mr. Hussein Al-Athel, Secretary General of the Riyadh Chamber of Commerce and Industry; Mr. Ibrahim Al Olayan, Secretary General of the Eastern province of Chamber of Commerce and Industry; Mr. Ziad Al Bassam, Chairman, Small Business Development Centre of the Jeddah Chamber of Commerce and Industry, and Mr. Bader al-Otaishan, Assistant Secretary General of the Federation of GCC Chambers of Commerce and Industry. The arrangements for the Conference from the Indian side were handled by the Confederation of Indian Industry (CII).

25.     The GCC India Industrial Conference was historic, marking the first ever structured gathering and composite dialogue forum involving GCC and India on such a magnitude.   The mega event symbolized the political will on all sides to complement and reinforce the strong India-GCC bilateral relations and to further promote engagement with the GCC as a group.  The Conference under the theme ‘Opportunities and Challenges in the 21st Century’ focused on four select  priority  areas  covering   GCC and India – (i) trade, (ii)  investments, (iii) industrial cooperation including Small and Medium Enterprises(SMEs)/Small Scale Industries (SSI) and (iv) transfer of technology including Information Technology.  

26.     The Conference recognized the great potential for economic and commercial cooperation between GCC and India and discussed ways and means to further reinforce the strong economic and commercial cooperation between India and GCC. GCC was India’s second largest trading partner.   GCC was also the largest single origin of imports into India and the second largest destination for exports from India.   The overall GCC-India trade amounted to about US $12.5 billion in the year 2002. The Conference called for increased cooperation in harmonization and recognition of business standards, trade documentation and certification to provide further streamlined movement of goods and services.  The Conference endorsed the GCC-India Framework Agreement for Economic Cooperation being discussed by the two sides, which will provide overall commitment for increased broad-based economic cooperation. It also welcomed the intention of the GCC and India to explore the possibility for GCC-India Free Trade Area (FTA).   On the sidelines of the Conference, important bilateral agreements/ MOUs were concluded between CII and the Federation of GCC Chambers of Commerce and Industry (FGCCC), as well as between Federation of Indian Chambers of Commerce and Industry (FICCI) and FGCCC. It was decided that the GCC-India Business Conference will be convened regularly on a biennial basis and the second GCC-India Business Conference will be held in Sultanate of Oman.

                 The Consulate General of India, Jeddah had launched a web site http://www.cgijeddah.com to provide updated information on various Economic, Commercial, Consular, Information and Haj services.  Web site of the Embassy of India, Riyadh, http://www. indianembassy.org.sa  has been operationalized.