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Why are India’s economic stakes high in West Asia?

  • Category
    International Relations
  • Published
    21st Jun, 2022

Context

In the wake of recent allegedly derogatory remarks made against Prophet Mohammad, that triggered a diplomatic offensive from the Muslim world, it is important to analyse India’s stakes in West Asia.

Background

The geographic boundary

  • Western Asia is bounded in the
    • west by the Mediterranean Sea and the Red Sea
    • north by the Black Sea, the Caucasus, and the Caspian Sea
    • east by the fringing mountains of Iran
    • south by the Arabian Sea and the Indian Ocean

    Assessing India’s dependence on West Asian countries

    • Domestic crude oil productionmeets less than a fifth of the country’s oil requirement, forcing India to rely on imports to fill the gap of over 80%.
    • The share of Gulf countries of India’s total crude oil imports has remained fairly stable over the past 15 years at around 60%.
      • In 2020-21, India’s top oil exporter was Iraqwith a share of over 22%, followed by Saudi Arabia – at around 18%.
    • Bilateral trade:Countries in the West Asian region collectively account for one-sixth of India’s total bilateral tradeand contribute about three-fifths of India’s crude oil supply.
    • Economic opportunity:The region is a major provider of jobs and economic opportunitiesfor Indian workers, professionals and entrepreneurs and is home to approximately 8.9 million Indians.

    Getting the better picture (with numbers)

    • According to the World Bank, India is the top remittance-receiving country in 2021.
      • In 2021, India received remittances totalling more than $89 billion, an increase of 8 percent above the $82.73 billion received in 2020.
      • The Reserve Bank of India (RBI) documents reveal that 82 percent of the total remittances received by India originated from seven countries: the United Arab Emirates (UAE), the United States (US), Saudi Arabia, Qatar, Kuwait, the United Kingdom, and Oman.
    • India's trade with the GCC in 2020-21 was $87 billion, and in 2019-20 it was $120 billion.
    • International Treaties:India has signed a Comprehensive Economic Partnership Agreement (CEPA) with the United Arab Emirates earlier this year, has become one of the biggest contributors to the region.
    • Easy access:With the region acting as a major hub for markets in Africa, India is keen to have tariff-free access to its exports not only in the Gulf region but also in countries in Africa.

    Challenges for India in West Asia

    • Islam: On issues of Islam, particularly with reference to the Quran and Prophet Mohammed, most if not all 57 members of the Organisation of Islamic Countries (OIC) stay together.
      • For them, it is also a common ‘identity issue’, in these times of perceived and propagated strife.
    • Lack of direct investment: India lacks direct investment in the energy sector of this oil and gas-rich region.
    • Growing divide:The region is quickly turning into a highly polarised part of the world. The growing divide between Riyadh and Tehran and Washington’s hypocritical ignorance could put New Delhi in a spot of bother.
    • Emergence of non-state actors:Another emerging threat in the region is of non-state actors. Large scale instability and growing terrorism in West Asia has increased the threat of takeovers of natural resources by non-state actors.
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