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Opportunities in the Gulf

Opportunities in the Gulf
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First Published: Thu, Feb 04 2010. 09 43 PM IST
Updated: Thu, Feb 04 2010. 09 43 PM IST
The stories of Sindbad, said to have set sail on his voyages from the town of Sohar in Oman, have fertilized the early imagination of generations of Indian children. A $969 million fertilizer plant now sits in Sur—another growing Omani town a short drive east of Sohar—as India’s largest overseas investment when it was launched in 2005. Sadly, it is also the grand exception that proves the rule—India has largely overlooked the smaller nations of the Persian Gulf.
Hydrocarbon-rich United Arab Emirates, Bahrain, Qatar, Kuwait and Oman have grown 20-25% annually in recent years, riding on an unprecedented surge in oil prices. Everyone from the US to Europe to China to Russia has been queuing up to improve business relations with these nations. But India, content in its ties with regional big brother Saudi Arabia, has been missing from the party.
There are many reasons why New Delhi should address this oversight. The Gulf supplies nearly two-thirds of India’s imported crude oil needs. With overall dependence on foreign oil set to exceed 90% by 2020 (according to the International Energy Agency), India will have to start relying increasingly on these smaller nations.
Dependence will grow even more for other forms of hydrocarbons, such as diesel and liquefied natural gas (LNG). This is already evident. India, which has been annually importing 5 million tonnes of LNG from Qatar since 2003, requested it in December to double the supply. The Qatari energy minister is still mulling over it.
The money sent by India’s 4.5 million expatriates in the Gulf forms at least a quarter of the remittance flow into the country. It goes to some of India’s poorest families. And it can increase further.
The growing Gulf economies will need more labourers and professionals to man a range of sectors—which India can provide. This is particularly true of the information technology (IT) sector, in which Gulf nations are as notoriously weak as India is famously strong. India can export IT experts to the Gulf, and import outsourced IT jobs from there.
Many other unexplored avenues of cooperation can be tapped into—the $1,000-billion Gulf sovereign wealth funds, for instance. India, which needs $500 billion in infrastructure financing in the coming years, signed a memorandum of understanding with Oman to set up a joint investment fund with seed capital of $100 million in late 2008. It was supposed to grow to $1.5 billion in two years, but little progress has been made. China, in contrast, has mopped up at least $250 billion for its service and real estate sectors from the Gulf.
Perhaps the most disappointing has been the failure to wrap up a free trade agreement, which will remove restrictive duties and push down tariffs on trade between India and the Gulf states. After more than five years of talks, the pact remains on the back burner.
India can be the Gulf’s preferred geopolitical partner. All other major international actors have regional political affiliations that the Gulf states are not happy about: The US and Europe are pro-Israel, China and Russia are pro-Iran. In addition, the US and Europe complicate political and economic relations by stepping on sensitive toes such as the lack of democracy in the region or human rights.
India, in contrast, does not interfere in these internal affairs. Its strong ties with both Israel and Iran—two countries that are pulling the region in different directions—as well as an improving relationship with the US make it more than a desirable partner for the smaller Gulf countries. If only it wants to be one.
Saif Shahin is a news editor at Mint. Comments are welcome at otherviews@livemint.com
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First Published: Thu, Feb 04 2010. 09 43 PM IST