Asia Watch

Saudi-Iran spat likely to have a significant impact on India

The growing spat between Saudi Arabia and Iran following the execution of an influential Shia cleric could have repercussions for India, which has adopted a position of neutrality since it enjoys good relations with both countries.

Jan 11, 2016
By Jayanth Jacob and Aman Malik
 
The growing spat between Saudi Arabia and Iran following the execution of an influential Shia cleric could have repercussions for India, which has adopted a position of neutrality since it enjoys good relations with both countries.
 
As several of Saudi Arabia’s close allies curtailed their ties with Iran, the kingdom’s foreign minister Adel Bin Ahmed al-Jubeir flew into Islamabad this week to seek Pakistan’s support in the standoff.
 
The Saudi-Iran tension, with the underpinning of a Sunni-Shia divide, is especially worrying for India since the Gulf region has vital economic and strategic significance for the country.
 
Additionally, the rift could see many Gulf nations with a sizable number of Indian expatriates picking sides. The region has sevenmillion Indian nationals who account for about $40 billion of the $70 billion that India receives in remittances annually.
 
“We have friendly relations with both countries and we would hope they are able to resolve the differences in a peaceful manner and international norms in terms of protection of diplomats are adhered to by both sides,” said Vikas Swarup, the spokerperson of the ministry of external affairs.
 
Saudi Arabia has the maximum number of Indian passport-holders outside the country. But with oil prices falling and Saudi Arabia grappling with mounting unemployment for people under 30 who constitute 70% of its population, there are concerns that the kingdom will not remain a key employment destination for Indians for long.
 
India also enjoys robust security cooperation with Saudi Arabia, which has deported several most wanted terrorists such as Abu Jundal, linked to the Mumbai attacks case. Although such steps do not in any way diminish the strategic partnership between Saudi Arabia and Pakistan, the growing security cooperation is of vital significance for India.
 
In the case of Iran, a sanction-free Tehran is India’s best bet in the region to advance its strategic interests, particularly with respect to Afghanistan.
 
Iran also holds the key for India’s ambitious connectivity plans for the oil and gas-rich Central Asian republics and to provide land-locked Afghanistan access to the sea via Iran’s Chabahar port, bringing down Kabul’s dependence on Islamabad.
 
But the row could also lead to some positive developments for India, which imports more than three-fourths of its energy requirements, because oil prices, already near historic lows, could head further south.
 
Several major Indian companies including Larsen & Toubro, Tata Consultancy Services, Tata Motors, Wipro, Infosys, Punj Lloyd, Shapoorji Pallonji, Godrej & Boyce, Air India, Jet Airways and State Bank of India also operate in Saudi Arabia.
 
Indian exports to the kingdom include mineral fuels and oils, chemicals, iron and steel and electric machines.
 
Hindustan Times, January b11, 2016

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