Saudi-Indian economic relations are to get a big boost with the arrival of a 50-member Saudi delegation led by Commerce and Industry Minister Tawfiq Al-Rabiah in New Delhi on Tuesday. During the next three days, the two sides are expected to discuss ways of strengthening investment and trade cooperation and setting up joint venture in vital sectors.
Indian officials and businessmen have given utmost importance to the visit of Saudi delegation, including top executives of 30 major Saudi companies, and believe it would pave the way for more Saudi investments in India. The Saudis on the other hand are looking for joint ventures with major Indian companies and industries.
Saudi Arabia and other Gulf Cooperation Council states are looking toward East, especially to India and China, for investment following 9/11 incidents and economic crisis in Western countries and India is planning to make use of this trend to mobilize funds required for its infrastructure and service projects.
This is Al-Rabiah's first official visit abroad after became the minister last month. A former director general of Saudi Industrial Property Authority, he has vowed to strengthen the industrial sector as part of the Kingdom's diversification drive. His visit is likely to open a new era in Saudi-Indian industrial cooperation.
Saudi Arabia, which is the largest economy in the Middle East and posted the best economic performance in 2011 in 20 years despite the prevailing global recession, will explore investment opportunities in India under the aegis of the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
The Kingdom's industrial sector achieved 15 percent growth rate in 2011 and private sector's contribution to the gross domestic product (GDP) amounted to 49 percent in 2011. Housing, road and railway projects are key sectors where Indian investments and work force can make a mark, said ASSOCHAM.
Other potential sectors include information technology, telecommunications, education and training, healthcare services, tourism and hotel industry, banking and financial services, power generation, oil, gas and petrochemicals, said its Secretary-General D.S. Rawat.
He said a 30-member trade delegation from India will visit Saudi Arabia later this month to meet key Saudi government officials and businessmen for exploring new business avenues. It will visit cities of Riyadh, Jeddah and Dammam during third week of January.
A total of 190 Indian companies are currently active in the Saudi market with investments totaling $2 billion - 39 in industries, 54 in services and 93 in agriculture besides others in construction, information technology, designing, consultancy and financial services.
A total of 55 Saudi companies or joint ventures are operational in India with a total investment of $200 million, mainly in paper manufacture, chemicals, granite processing, industrial products, machinery, cement and metallurgical industries.
"However, there is still an enormous potential to take this business further," said Rawat.
Saudi Arabia has the world's second largest oil reserves and is a leading member of the six-member GCC. Two-way trade between India and GCC could exceed $130 billion by 2013-14, up from $100 billion in 2010.
The GCC countries and India have identified various potential sectors for bilateral cooperation like petroleum oil and energy, gas and fertilizers, information technology, higher education, civil aviation and agriculture. A framework agreement for the FTA has already been signed.
The India-GCC FTA is expected to open a billion consumers' market for Gulf countries. An FTA in the region will benefit India substantially as the six member countries control over 45 percent of the world's recoverable oil wealth and 20 percent of gas resources. They supply about a fifth of the global crude output.
The FTA will remove restrictive duties and push down tariffs on goods being traded. This will provide Indian pharma and chemical industry to export their products to the Gulf region. India is Saudi Arabia's fourth largest trading partner while Indians form the Kingdom's largest expatriate work force, from IT to construction, consisting of both blue-collar workers and professionals.
Items having export potential from India to GCC countries include food products, pharmaceuticals, machinery and transport equipment, ceramic products, articles of apparel and clothing, cotton and woven fabrics, plastic and rubber products, essential oils, perfumery and cosmetics besides iron and steel articles.