Business & Partnership

Historic opportunity beckons Saudi Arabia and India in post-oil age

"The deepening of our bilateral relationship is an important step as the economies of Saudi Arabia and India are positively transforming and the two nations are looking at furthering trade and investment cooperation by aligning the Kingdom’s Vision 2030 and with India’s flagship initiatives of ‘Make in India’, ‘Start Up India’, ‘Smart Cities’ and ‘Digital India’"   
By Dr. Saud Bin Mohammed Al-Sati Apr 4, 2019
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Photo: Indian Prime Minister Narendra Modi with Saudi Arabia's Crown Prince Mohammed bin Salman at Hyderabad House, New Delhi on 20 February, 2019 
 
The friendly relations between Saudi Arabia and India are centuries-old marked by geographical proximity, civilizational links, cultural affinity, and vibrant human interaction, including exchange of knowledge, ideas, and culture. Our ties rest on trust, mutual understanding, goodwill and respect for each other’s interests. A strong spirit of friendship binds our countries together.
 
Business and cultural relations between Indian and the Arab civilizations can be traced back to the very beginning of recorded history and had a profound influence on each other which continues till today. In the ancient era, trade between our countries comprised largely of spices, aromatics, almonds and dates.  However, the civilizational ties between the two countries have been enriched by the movement of not only goods but people and ideas as well. Both nations share a rich history of literature. Scholars from India came to our region to learn Arabic language and Islamic jurisprudence and the Arabs came to India to learn mathematics, astronomy and philosophy. The Abbasid state in mid-8th century AD witnessed the founding of "Bait-ul-Hikmah" or House of Wisdom where scholars translated ideas and scholarly works from all over the world into Arabic. It translated many Indian works, the most prominent being the "Panchatantra", a collection of ancient Indian fables in Sanskrit. The great Arab scholar Al Beruni visited India in early 11th century and wrote an encyclopedic book on India, presenting it in an enlightening form to the world, besides translating books from Sanskrit to Arabic and viceversa. Today, Arabic language  is taught in many schools and universities across India, contributing to the Arab culture and literature.
 
The last decade has been particularly seminal in transforming the nature of our bilateral relationship. Co-operation between our countries has made remarkable progress in diverse fields including trade, energy, security and cultural spheres since the signing of the landmark Riyadh Declaration of February 2010 that elevated our relationship into a strategic partnership. The frequency of high-level bilateral visits in recent years demonstrates the commitment to strengthen our strategic partnership. The Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud's visit to India in February 2014 was followed up by the visit of Prime Minister Narendra Modi to Saudi Arabia in April 2016. And most recently, His Royal Highness Prince Mohammed bin Salman bin Abdulaziz, Crown Prince, Deputy Prime Minister and Minister of Defense, paid his state visit to India in February 2019. This was closely followed by the visit of Saudi Arabia’s Minister of State for Foreign Affairs and Member of the Cabinet Adel bin Ahmed Al-Jubeir and the visit of Minister of Energy, Industry and Mineral Resources Engineer Khalid bin Abdulaziz Al-Faleh in March 2019. Our strategic partnership has received another boost with the announcement of a Strategic Partnership Council led by Prime Minister Narendra Modi and His Royal Highness Crown Prince, supported by ministerial representation covering the whole spectrum of strategic sectors. India was also accorded special status at last year’s Al Janadriyah, Saudi Arabia’s national heritage festival. The gesture is deeply symbolic of our close and growing linkages.
 
Emergence of India as a global power and trusted partner
 
The deepening of our bilateral relationship is an important step as the economies of Saudi Arabia and India are positively transforming and the two nations are looking at furthering trade and investment cooperation by aligning the Kingdom’s Vision 2030 and with India’s flagship initiatives of ‘Make in India’, ‘Start Up India’, ‘Smart Cities’ and ‘Digital India’.
 
India is one of the fastest growing large economies in the world fueled by reforms, a young population and a burgeoning technology powered landscape. The Saudi government has also dedicated vast resources to enhance the well-being of the Saudi people and is focused on creating a vibrant society, a thriving economy and an ambitious nation. The state budget for fiscal year 2019 is the largest budget in the history of the Kingdom of Saudi Arabia and it aims to support economic growth in the Kingdom, raise the efficiency of spending and achieve sustainability and financial stability within the objectives of the Kingdom Vision 2030.
 
We are ready to leapfrog into the future together. The recent workshop between NITI Aayog and Saudi Centre for International Strategic Partnership (SCISP) has identified more than 40 opportunities of joint collaboration and investments across various sectors. There is huge untapped potential available in merchandise trade, particularly in non-oil trade and we are enhancing cooperation in economic, commercial, investment, cultural and technological fields. Our bilateral trade, currently standing at around $27 billion, will certainly see a significant jump in the years to come as we engage in in a host of new areas such as information and communications technology (ICT), health care, defense, biotechnology, education and infrastructure among others.
 
Vision 2030 and transformation of Saudi Arabia
 
Vision 2030 aims to transform the entire foundation of our Kingdom’s economy. We are now looking to a post-oil age that will usher in an era of world-class technological research, start-up development, entrepreneurial vigor and vast investment opportunities. Our aim is to free the Kingdom’s economy from oil dependency by diversifying revenue streams, attracting foreign investment and establishing Saudi Arabia as a global hub.
 
The entire foundation of our Kingdom’s economy is being transformed towards a post-oil age with the aim of attracting $427 billion in private investments over the next decade to diversify the economy and create 1.6 million new jobs through the National Industrial Development and Logistics Program. We view India as a partner in this exciting new phase of our country’s profound growth.
 
The construction market in Saudi Arabia is also expected to reach a record high of USD96.52 billion in 2025, up from about USD45.33 billion currently. Another important development has been the signing of MoU between Public Investment Fund of Saudi Arabia (PIF) and Softbank to build the world’s biggest solar energy project with investment of USD 200 billion and capacity of 200 gigawatts by 2030. These projects will help create up to 100,000 direct and indirect jobs in the Kingdom. There are multiple giga-projects underway — smart city project Neom, entertainment city Qiddiya and the Red Sea Tourism Project among others.
 
I will take a moment to share a few key details about Neom. Neom’s vision is to be the land of the future, where the greatest minds and best talents are empowered to embody pioneering ideas and exceed boundaries in a world inspired by imagination. It will have new cities with extensive infrastructure that includes a network of airports, an advanced seaport, industrial areas, as well as creative and innovation centers to unlock the potential of a knowledge-based economy, and a range of world-class tourist destinations. 16 key economic sectors, which includes energy, water, tourism, media, health and well-being, sport, food, mobility, biotech, manufacturing and livability, will put it on the global investment map.
 
Four entertainment projects, King Salman Park, Riyadh Green, Sports Boulevard, and Riyadh Art, worth $23 billion, have been launched just this month. The projects will complement Saudi Vision 2030’s ‘Quality of Life’ Program and are aligned with the UN Sustainable Development Goals, to create sustainable cities and communities, while driving urgent action against climate change. They offer investment opportunities worth of $14 billion to local and foreign investors and their implementation will begin shortly.
 
Overall, the country’s infrastructure is being developed and upgraded, including expansion of the railway system and introduction of a new light rail mass transit project with metro lines and a community bus network in the Kingdom’s major cities of Riyadh, Jeddah, Makkah and Medina. The Haramain high-speed rail spanning 450 km network is already serving the people. A USD100 billion planned investment in transport projects will occur over the next decade.
 
With Vision 2030 serving as a blueprint, we are working with the strategic objective of welcoming 30 million pilgrims each year by 2030 to perform Haj and Umrah. The third phase of expansion of Grand Mosque is in full swing and is estimated to cost about US$ 50 billion. Expansion of the building itself covers 1.47 million square meters, including 78 new gates. The airports are being modernized and their capacities are being augmented. King Abdul Aziz International airport, for instance, will have a complex of travel halls with an area of 8,10,000 square meters allowing all air carriers to operate under one roof.
 
We have initiated a program of restructuring at all levels of government. Digital services have been expanded to reduce delays and cut tedious procedures to build a government that is effective, transparent, and accountable. Significant steps have been taken to improve the business and investment climate to promote industrial development, particularly small and medium-size enterprises (SMEs). With its platform Meras, starting a business in the Kingdom now requires only one step and one day! The single-window platform Fasah has also been launched for customs clearance and import and export procedures. The ‘Doing Business 2019’ report has ranked Saudi Arabia as the fourth-largest reformer within the G20. In 2018, Saudi Arabia saw foreign direct investment rise by 127% year-on-year. In a couple of months, the Kingdom will be included in the MSCI Emerging Markets Index and the MSCI ACWI Index. Multiple regulatory and operational improvements are opening the domestic market to international institutional investors.
 
Evolution in Saudi-India economic ties
 
We are already engaging constructively in multiple domains with India. Saudi Aramco and the Abu Dhabi National Oil Company (ADNOC) are jointly developing the West Coast Refinery and Petrochemicals Limited (RRPCL). The $44 billion-mega refinery and petrochemicals complex will be the largest green field refinery in the world to be implemented in one phase and we are proud to be a part of it. In addition to the $44 billion, $10 billion investment through the Public Investment Fund and its technology partners, and other investments opportunities potentially worth $26 billion are also being explored. Saudi Arabia is looking at making investments in India potentially worth $100 billion in the areas of energy, refining, petrochemicals, infrastructure, agriculture, minerals and mining, manufacturing, education and health. Our partnership has grown beyond the supply of crude oil, refined products and LPG to a comprehensive energy partnership focusing on investment and joint ventures in petrochemical complexes and cooperation in joint ­exploration. I must also assert; the Kingdom has been and will remain committed to meet India’s growing needs for crude oil and petroleum products. Energy security is a key pillar of our strategic partnership with immense scope for growth of bilateral trade in the energy sector.
 
Renewable energy is our next big bet. Our New Solar Energy Plan 2030 is the world’s largest project of its type. By 2019 the Kingdom’s first two solar generation projects with 3GW and 4.2GW of solar capacity will be commissioned and by 2030, more than 150 GW solar power will be generated! The Plan will increase the GDP by $12 billion and save up to $40 billion annually. During the recent visit of the HRH Crown Prince, Saudi Arabia also signed a MoU to join the International Solar Alliance. There is indeed great potential for cooperation in the renewable energy sector not only in investment but also in R&D.
 
According to the Saudi Arabian General Investment Authority (SAGIA), there were 322 Indian companies as joint ventures or 100 per cent owned entities worth US$ 1.4 billion in the Kingdom till December 2017. The licenses are for projects in diverse sectors such as management and consultancy services, construction projects, telecommunications, information technology, pharmace­uticals, among others. Several Indian companies have est­ablished collaborations with Saudi ­companies and are wor­king in the Kingdom in the areas of ­desi­gning, consultancy, fin­a­ncial ­services and soft­wa­re development.  Major Indian Companies such as L&T, TATAs, Wipro, TCS, TCIL, Shapoorji & Pallonji, EPIL etc. have established strong presence in Saudi Arabia.  The Indian Hotels Co. Ltd. and OYO Hotels have recently announced their foray into our markets. Bharat Forges based out of Pune has entered into an agreement with ERAM based out of Dammam. 
 
Apart from energy, we also intend to invest in India in the areas of infrastructure, agriculture, minerals and mining, manufacturing, education and health. The Ministry of Energy, Industry and Mineral Resources signed a MoU with the Indian Ministry of Finance on Saudi Arabia's investment in the National Investment and Infrastructure Fund Limited (NIIFL) of India. It also signed an MoU between the Industrial groupings and Glenmark company on pharmaceutical industry. Another was signed among the Industrial groupings, Middle East Healthcare Company and Indian Trifatron Company to localize the medical supplies industry.
 
Saudi Arabian Mining Company (Maaden) also signed two MoUs to supply five million tons of phosphate fertilizers to the Indian market with IPL Company and KRIBHCO company worth $2 billion for five years. Signing of the Framework Cooperation Agreement between the Saudi Arabian General Investment Authority (SAGIA) and Invest India in 2016 was significantly instrumental in bringing positive change in investment climate. Now these MoUs will further pave the way for expanding bilateral economic cooperation.
 
Soon a Joint Working Group on Skill Development will also be set up to identify areas of cooperation, where the two countries can benefit from each other’s core competencies in important fields such as manufacturing, information technology, communications, and programming. The two nations are also seeing more cooperation in the areas of space, science and technology, including remote sensing, satellite communication and satellite-based navigation.
 
Partnering to keep the region secure and peaceful
 
Terrorism is a common concern for both Saudi Arabia and India and the two countries have been closely cooperating in fighting it, including through exchange of information and intelligence. Saudi Arabia is leading the global campaign against terrorism, terror financing and extremism. Saudi Arabia was among the first countries to strongly condemn the tragic terror attack in Pulwama. Both countries have signed several agreements in the field of security, including an extradition treaty. During the April 2016 visit of Prime Minister Modi to the Kingdom, the two sides decided to further enhance cooperation in counter-terrorism operations, intelligence sharing and law enforcement.  In fact, during the visit, the two sides also agreed upon the need to intensify bilateral defense cooperation through exchange of visits by military personnel and experts and exchange of visits of ships and aircrafts. Last year Saudi cadets travelled to India for training at the National Defense Academy (NDA). This is the second group of Saudi military cadets to come to India. An MoU has also been signed on technical cooperation in cyber space and combating cybercrime; maritime security, law enforcement, anti-money laundering, drug trafficking, human trafficking, illegal migration, and other transnational organized crimes. We are also collaborating in joint defense production of spare parts for naval and land systems as well as for Disaster Resilient Infrastructure. We have also constituted a Comprehensive Security Dialogue at the level of National Security Advisors and set up a Joint Working Group on Counter-Terrorism.
 
Human Bonds of Friendship and Culture
 
India is a primary focus of the Kingdom’s campaign to court foreign investors and expertise. India’s economy is projected to rise sharply over the next couple of decades and to become the second largest in Asia by 2040.The Kingdom has also left no stone unturned to make its investment climate conducive.
 
India holds a special place for us. There are approximately 3 million Indians living in my country, which forms the largest expatriate community in the Kingdom.  I have come across so many stories of the deep human bonds that exist between the peoples of Saudi Arabia and India. Doctors, engineers, IT professionals, workers, academicians, scientists and chemists are all part of the Indian community in Saudi Arabia, working hard to establish themselves in almost all economic sectors. We look at them as partners. Indians are highly regarded for their educational and technical achievements; for their integrity and sense of discipline; for their honesty and devotion to work. The contribution of Indians in economic development has been acknowledged by our government and we have made significant efforts to make them feel at home. 
 
Religion is yet another common factor that pulls us closer. Last year 1,75,025 pilgrims, a record number, from India went for Haj. These included more than 47 per cent female pilgrims. For the third consecutive year in a row India’s Haj quota has seen an increase. This year the quota has been increased to 200,000. The Kingdom has also consented to India’s plan of reviving the cost-effective sea route for Haj.
 
As formidable economies of Middle East and Asia, Saudi Arabia and India have a historic opportunity to collaborate in shaping the future of our regions, for a better tomorrow full of prosperity and promise.
 
(Excerpted from an address delivered at Amity University, Noida on April 1, 2019)
 

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