The story up to now: The diplomatic fallout from the provocative and communally charged feedback made by two erstwhile spokespersons of the ruling Bharatiya Janata Get together (BJP), compelled the federal government into firefighting mode earlier this month after a number of West Asian nations together with Qatar, Kuwait, Iran, Bahrain, Oman, Iraq, Saudi Arabia and the UAE in addition to the 57-nation Organisation of Islamic Cooperation (OIC) and the six-member Gulf Cooperation Council (GCC) took sturdy exception to the remarks denigrating Islam and the Prophet Muhammed. In response, Indian officers strenuously asserted that the federal government stood by the nation’s conventional values and revered all religions. It additionally tasked its diplomats to achieve out to particular person OIC member states and reassure them on India’s place of an ‘inclusive’ method to all communities.

What prompted the federal government response?

India’s cultural, financial and commerce ties with the nations of the West Asian area are deep and abiding. Beginning with maritime commerce, the change of products, providers and cultures between the folks of the Gulf area together with these on the western shores of the Arabian Sea and the folks of India’s southern and western States reaches again a number of millennia and considerably predates even the muse of the Islamic religion.

The West Asian area additionally served as a land commerce bridge to Greece, Rome and different early European empires and a flourishing commerce in spices, material, silk and indigo in change for gold and silver is nicely recorded.

In a extra up to date historic context, the British colonial period noticed the appearance of even a unfastened widespread financial system with the rupee serving as authorized tender in a number of Gulf states until the center of the twentieth century. It was additionally the invention and subsequent industrial exploitation of oil within the Gulf area throughout the colonial period that began to change the steadiness of commerce flows between India and the nations within the area.

Right now, the nations of the West Asian area collectively account for nicely over a sixth of India’s whole bilateral merchandise commerce and contribute about three fifths of India’s crude oil provides. The area can be a significant supplier of jobs and financial alternatives to Indian staff, professionals and entrepreneurs and homes about 89 lakh Indians. These non-resident Indians (NRIs) yearly ship house about $40 billion, and account for greater than 55% of the nation’s whole remittance inflows. Investments from sovereign wealth funds and different giant buyers from the GCC have additionally climbed steadily lately and India, which earlier this yr signed a Complete Financial Partnership Settlement (CEPA) with the UAE, is trying to considerably enhance commerce ties with the area by negotiating extra such commerce and funding pacts.

It’s the sizeable and quickly rising financial interconnectedness that the federal government is eager to insulate from any fallout over this delicate and doubtlessly disruptive concern.

Why is India so depending on West Asian nations for its power wants?

Home crude manufacturing, which has been declining through the years, meets lower than a fifth of the nation’s oil requirement, forcing India to take recourse to imports to fill the hole of greater than 80%. An Observer Analysis Basis (ORF) April 2022 paper analysing ‘India’s oil imports: Developments in diversification’ notes that out of India’s whole imports of crude oil, the share of the Gulf nations has remained pretty regular at about 60% over the past 15 years. The ORF research observes that in 2020-21, the highest oil exporter to India was Iraq, with a share of greater than 22%, adopted by Saudi Arabia — about 18%. The UAE, Kuwait and Oman have been different Gulf nations among the many top-10 suppliers of crude oil to India within the fiscal yr ended March 2021.

A big proportion of India’s refineries have additionally traditionally been predominantly configured to course of the sulphur-heavy bitter grades of crude which might be produced within the Gulf area and with the sweeter (low sulphur) grades of oil equivalent to Brent proving comparatively costlier, India’s crude purchases have over the past 20 years steadily shifted to being extra weighted in the direction of the Oman and Dubai bitter grades, based on information on the composition of the Indian basket of crude compiled by the Ministry of Petroleum and Pure Fuel’s Petroleum Planning and Evaluation Cell (PPAC). Whereas the ratio of bitter grades to candy grades was 57:43 within the fiscal yr ended March 2001, the proportion of bitter crude to Brent had elevated to 75.62:24.38 within the 12 months ended March 2022.

How reliant is India on the area for non-oil commerce?

Over the 5 years from 2017 by 2021, Iran and the GCC member states comprising the UAE, Saudi Arabia, Bahrain, Oman, Kuwait and Qatar accounted for a 15.3% share of India’s cumulative two-way merchandise commerce of $3.98 trillion in that interval, based on statistics accessible on the UN Comtrade database. Of the $609 billion of exports and imports that the seven nations accounted for on this interval, the UAE contributed the lion’s share of $277.4 billion, or virtually 7%, making it certainly one of India’s largest buying and selling companions. Saudi Arabia was subsequent with $153 billion. The area is as we speak a key marketplace for a number of Indian commodities starting from tea and basmati rice to electrical gear, attire, and equipment. Reflecting this significance, India and the UAE signed the CEPA in February with the purpose of accelerating the whole worth of bilateral commerce in items to greater than $100 billion in 5 years and getting providers commerce to exceed $15 billion over the identical interval. The commerce pact will present Indian exporters preferential market entry on ‘99% of the nation’s exports to the UAE in worth phrases, notably from labour-intensive sectors equivalent to gems and jewelry, textiles, leather-based, footwear, sports activities items, plastics, furnishings, agricultural and wooden merchandise, engineering merchandise, prescribed drugs, medical gadgets, and cars’, based on a Ministry of Commerce and Business launch. With the CEPA now serving as a framework, the federal government is actively pursuing a broader FTA (Free Commerce Settlement) with the GCC as an entire. With the area serving as a key hub to markets in Africa, India is eager to achieve tariff-free entry for its exports not simply to the Gulf area but in addition to nations throughout Africa.

What else is at stake?

The West Asian area gives among the many largest variety of abroad jobs for Indians, with practically 89 lakh Indians residing and dealing within the Gulf economies. The UAE, which contains the seven emirates of Dubai, Abu Dhabi, Sharjah Ajman, Umm Al-Quwain, Fujairah and Ras Al Khaimah, accounts for the most important share of NRIs within the area and is house to greater than 34 lakh Indians. Saudi Arabia with near 26 lakh and Kuwait with over 10 lakh are the opposite giant suppliers of jobs and financial alternatives for Indians. Indians are as we speak ubiquitous by their presence throughout an unlimited vary of job classes within the area spanning development labour to grease trade staff, nurses and medical doctors within the medical sector to the hospitality trade and finance professionals.

The remittances that they despatched again house in 2017, based on Pew Analysis information, accounted for about 55% of the whole $68.97 billion in inward remittances obtained in India from internationally that yr.

• The diplomatic fallout from the provocative and communally charged feedback made by two erstwhile spokespersons of the ruling Bharatiya Janata Get together (BJP), compelled the federal government into firefighting mode earlier this month.
• India’s cultural, financial and commerce ties with the nations of the West Asian area are deep and abiding.
• Right now, the nations of the West Asian area collectively account for nicely over a sixth of India’s whole bilateral merchandise commerce and contribute about three fifths of India’s crude oil provides.