Beyond Dubai: Indian Investments Are Finding A New Home In Saudi Arabia

Two, Saudi Arabia has in recent times opened up its economy and society and positioned itself as the heart of the Arab world, connecting three continents – Asia, Europe and Africa. Three, the Strategic Partnership Council (SPC) between India and Saudi Arabia, co-chaired by the Prime Minister of India and the Crown Prince of the Kingdom, is revving up bilateral relations.

At the recent September 2023 New Delhi summit, when the Crown Prince visited the country, the two sides signed several MoUs in the fields of energy, security, defence production, civil aviation, medical products, strategic petroleum reserves, small and medium scale industries, launch of Rupay card and cooperation between stock exchanges.

Finally, there have been at least 15 ministerial visits from the Indian side since Narendra Modi became the Prime Minister of India in 2014, showing the importance that India attaches to this relationship.

Bilateral investments

Indian investments in Saudi Arabia have increased in recent years and reached approximately US$ 3 billion (August 2023). These investments are dispersed in diverse sectors such as management and consultancy services, construction projects, telecommunications, information technology, financial services and software development and pharmaceuticals.

“Saudi Arabia is building a number of new green cities linked to ports including Neom. They do pose interesting possibilities for Indian investments especially in the light of logistical plans for an India-to-Europe transport corridor which includes Saudi Arabia and Israel," Pinak R Chakravarty, former Secretary, Ministry of External Affairs, told The Secretariat.

Added an Indian diplomat working in one of our embassies in the Middle East, who did not want to be named, “Major Indian companies and corporate groups such as L&T, the Tata Group, Wipro, TCS, TCIL, Shapoorji & Pallonji, Air India, Go Air, Indigo, and SpiceJet have in recent times established a more robust presence in Saudi Arabia.”

In fact, Larsen and Toubro (L&T) has a US$ 15-16 billion order book from Saudi Arabia of which a significant portion is from Aramco. The future potential is good. R Shankar Raman, the Chief Financial Officer (CFO) of L&T, has said that the overall market potential of the Kingdom is about US$ 250 billion a year.

TCS Saudi Arabia is recognised as one of the top 10 IT service providers in the Kingdom with an employee count of 2,700. An all-woman digital services centre in Riyadh, which started with 20 associates a decade back, now has 700 employees.

On the other hand, Saudi Arabia is the 19th-largest investor in India with investments amounting to US$ 3.22 billion (June 2023). Major investments include Public Investment Fund’s (sovereign wealth fund of Saudi Arabia) investments in Reliance Jio Platforms ($1.5 billion to acquire a 2.32 per cent stake) and Reliance Retail Ventures Ltd ($1.3 billion to acquire a 2.04 per cent stake).

Further, Saudi Agricultural & Livestock Investment Company (SALIC) has acquired a 33 per cent stake in Daawat Foods Ltd through its subsidiary United Farmers Investment Company, for a value of US$17.23 million.

Additionally, in July 2021, PIF invested in India-based healthtech Healthifyme’s US$75 million Series C funding round, indicating a growing appetite for the Kingdom’s sovereign wealth fund to invest in India’s sunrise sectors.

Apart from PIF, major investment groups from the Kingdom in India include Aramco, SABIC, and Zamil. For example, there was a recent Reuters news report that said the Indian government would like Aramco to hasten its participation in the government’s 6.5 million metric tons Strategic Petroleum Reserve (SPR) programme.

Soft Bank’s ‘Vision Fund’ (in collaboration with Saudi Arabia) has invested in several Indian start-ups such as Delhivery, FirstCry, Grofers, Ola, OYO, Paytm and PolicyBazaar. SABIC has invested over US$ 100 million in its technology and innovation Centre in Bengaluru, one of the largest investments in India by a Saudi company.

Further, during his visit to India in February 2019, the Saudi Crown Prince had announced that the Kingdom would be investing US$100 billion in India in diversified sectors such as energy, refining, petrochemicals, infrastructure, agriculture, minerals and mining, manufacturing, education and health in the forthcoming years.

A team from Invest India, the government’s national investment Promotion and Facilitation Agency, has visited Saudi Arabia multiple times and held Kingdom-wide interactions with major players in diversified sectors.

Trade

Saudi Arabia is India’s fourth largest trade partner and India is Saudi Arabia’s second largest trade partner. India’s imports from Saudi Arabia reached US$ 42.03 billion, and exports to Saudi Arabia were worth US$ 10.72 billion registering an increase of 22.48 per cent over last year. The total trade with Saudi Arabia accounted for 4.53 per cent of India’s total trade in FY 2022-23.

Major commodities of export from India to Saudi Arabia included engineering goods, rice, petroleum products, chemicals, textiles, food products, ceramic tiles. Whereas, major commodities of import for India from Saudi Arabia are crude oil, LPG, fertilisers, chemicals and plastic and products.

Strategic Partnership Council

SPC covers various sectors of cooperation, overarching the existing institutional mechanisms of the Joint Working Commission. It has two basic pillars: political-security-socio-cultural; and economic and investment.

India’s External Affairs Minister and the Saudi Foreign Minister co-chair the Political-Security-Socio-Cultural pillar whereas the economic and investment pillar is co-chaired by the Commerce & Industry Minister on the Indian side and the Energy Minister on the Saudi side.

Under the two pillars, there are 8 Joint Working Groups (JWGs) which hold regular meetings. The economic and investment pillar consists of 4 JWGs covering the following heads: industry and infrastructure; agriculture and food security; IT and technology; and energy.

The first Summit meeting of the Strategic Partnership Council took place during the state visit of Saudi Crown Prince and Prime Minister Mohammed Bin Salman on September 11, 2023. The meeting marked a new milestone in the India-Saudi bilateral ties and underlined the burgeoning commercial engagements.

Clearly, India-Saudi Arabia relations are on a new high.