The Indian Prime Minister's proactive outreach to Saudi Arabia and the United Arab Emirates has opened up many new opportunities, worth billions of dollars from the Arab world, thanks to graduation from purely transactional alliances to a convergence of economic, strategic and military interests.
Consider this: Indian Prime Minister Narendra Modi was honoured with the King Abdul Aziz Sash, Saudi Arabia's highest civilian award, in 2016. Last year, the United Arab Emirates (UAE) followed suit and conferred the Order of Zayed, its highest honour on Modi. On both occasions, Modi very graciously accepted the honour on behalf of the India's 1.3 billion people, but these awards signalled something with far greater geopolitical salience than just the recognition of a centuries-old bilateral relationship.
On both occasions, Modi very graciously accepted the honour on behalf of the India's 1.3 billion people, but these awards signalled something with far greater geopolitical salience than just the recognition of a centuries-old bilateral relationship.
In fact, ties between India and these two Gulf monarchies is so close that New Delhi and Riyadh raised their relationship to the level of a “Strategic Partnership”; with the UAE the stakes were raised even higher as the two countries signed an agreement on a “Comprehensive Strategic Partnership” in 2017.
These agreements have been followed by heightened defence and security collaboration between India and these two countries. Over the past few years, these two countries have extradited several criminals and terrorists - some of them trained in and financed by Pakistan - to India. This would have been inconceivable just 10 years ago. In the sphere of defence cooperation, the Indian Air Force (IAF) made its first staging visit to Saudi Arabia in 2015. Three years later, India and the UAE held their first bilateral naval exercise.
This new strategic tango between India and the two Arab states is a result of Modi's proactive diplomacy and geopolitical outreach as well as a convergence of economic, strategic and military interests.
It was only in the early 2000s that these two strategically important and politically influential Arab monarchies in the Middle East began to warm up to India, Prior to that, India's bilateral relations with Saudi Arabia and the UAE had been very transactional - India saw these states as sources of crude oil and NRI remittances, both critical for the Indian economy, while the two Gulf states viewed India as a source of cheap white and blue collar workers.
But India's rising economic profile in the 2000s following the liberalisation process initiated a decade earlier made it an attractive investment destination for Saudi Arabia and the UAE and increasingly important customer for their oil.
The overall economic and strategic relationship has blossomed over the past couple of decades. Bilateral trade with UAE has grown to $60 billion in 2018-19, making it India's third largest trading partner. This is expected to touch $100 billion this year. It is also the second-largest export destination for India, with exports worth $30 billion during 2018-19.
Then, UAE is India's 10th largest source of FDI with inflows of about $13 billion mainly in sectors such as services, sea transport, power, infrastructure and housing.