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Keynote address by Secretary (CPV&OIA) Shri Sanjay Bhattacharyya to FICCI on India’s engagement with Arab World

September 22, 2020

I appreciate this opportunity to speak to you about India’s engagement with the Arab region and the opportunities that lie ahead. My congratulations to FICCI on formation of India-Arab Council. As business leaders, you will give shape to our economic engagement and seek new opportunities and I hope you will all make profit!

1. The Arab region

Friends, this region is familiar to us. We had ancient contacts and trade for aeons. People settled in each other’s lands. We exchanged philosophy and religion, science and culture, enriching our communities. The stories of Gilgamesh and Krishna are familiar, there are ancient temples in Arab lands, the Rupee was used in some areas and some territories were governed from Bombay in colonial times.

Today, the Arab region is part of our extended neighborhood. Just as we had a special priority for the East, today we have it for the Arab world in our Look/Act West policy, reflecting our priority and intimacy.

One can broadly divide the 22 Arab countries and Israel into 3 groups – north of Gulf, we have Arab partners with whom we have traditional connections but this region is today facing conflict; the Gulf region, where we have strategic partnerships which is politically stable and economically prosperous; the African region along the Mediterranean with which we have deep ties, which enjoys relative stability and moderate prosperity. In a sense, the region from Oman, on the Arabian Sea, to Morocco, on the Atlantic coast, has common features and provides great opportunities.

2. Covid diplomacy

Covid brought a pandemic, which was not only a health crisis but also imposed socio-economic challenges. It was an imperative for the global community to coordinate efforts in the fight against coronavirus.

India’s response to Covid has been impressive – we slowed the spread of the virus, built health infrastructure and developed medication and vaccine capability. Consequently, we saw high recovery and low deaths. At the same time, we extended our cooperation to more than 150 countries across the globe.

With the Arab world, we cooperated on repatriation of stranded citizens, in both directions. Vande Bharat Mission, the largest repatriation exercise, has been possible because of the active support from our Arab partners. We are happy that the return of Indian workers and professionals to the Gulf region has now begun. With return of PRs to their families and return to Gulf of professionals in healthcare, data management, oil and construction sectors and even sports professionals, the future of our cooperation in human resources looks bright.

India provided emergency medical supplies to several Arab countries, emerging as the first provider of humanitarian assistance to Covid. Our medical team went to Kuwait and our medical and humanitarian supplies reached Lebanon soon after the tragic explosion at the Beirut port. Further, India was able to provide, during the pandemic, thousands of healthcare professionals to Saudi Arabia and hundreds to Kuwait, Bahrain and UAE to help them address the challenge of Covid. We also had cooperation in Covid research and testing. We are ready to support in vaccine availability from India, as we will be the largest producers, once the vaccine is ready.

3. Current engagement

Multifaceted exchanges with strong growth characterises the nature of our engagement with the Arab region. As it is our extended neighborhood, we have several strategic partnerships and there is positive momentum in our relations with all Arab countries. Importantly, these relations are independent of our relations with others and are not affected by their internal differences.

The key elements of our economic engagement are characterized by energy security, food security, human resource exchanges, growing trade and investment relations and strong connectivity. It is multi-faceted and extensive but the potential is bigger.

On energy security, 53 % of India’s oil imports and 41% of gas imports come from the region. India has stakes in oil blocks in Iraq, Syria, Libya, UAE, Yemen and South Sudan. The nature of the partnership has evolved from mere hydrocarbon ties between buyer and seller to participation in upstream & downstream projects, joint ventures in refineries and building of strategic oil reserves. We are also embarking on a partnership in renewables.

On food security, India remains the trusted and long-term reliable source of food exports to the Gulf, with growing ties in the rest of the Arab world. The partnership has become stronger with connectivity, establishment of joint ventures and cooperation along the value chain. At the same time, India sources 60% of fertilizer and raw material imports from the Arab world, which deepens our mutual relations.

Human resource exchanges are a major element of our bilateral cooperation with the Arab world, particularly in the Gulf. Indians are the largest expat community in Arab world with 9 million workers and professionals (30% of all expat work force). Indian expats remit around $48 billion to India from the Arab world, contributing greatly to our domestic development. There is wide recognition that Indian expats are a major factor in the development of the Gulf region and their contributions are greatly appreciated by the Gulf States. In fact, Indians are the preferred migrants in the region and have influenced the culture of friendly Arabs, particularly through Indian films, music and food, and now even cricket.

Our economic engagement is the most vibrant aspect of our growing relations. Investments from Arab region is US$7 billion in cumulative FDI equity flow from 2000-18, approx 2% of total FDI. However, the growth in recent years has been promising and participation of sovereign wealth funds and portfolio investments is seeing a positive trend. Key sectors of investment are power, metallurgical industries, real estate and construction, services and IT. Our total trade with Arab world of $162 billion makes it a major trading partner. Although hydrocarbons account for the bulk of the trade, the basket has diversified in recent years to include engineering goods, gems and jewellery, precious metals, food products, textiles and chemicals in our exports and gold and other products in our imports.

India’s corporate presence in the Arab world has grown in construction, FMCG, IT & ITES, banking, power, fertilizer, automobiles, chemicals, petrochemicals, tourism, healthcare and pharmaceuticals. On connectivity, India has direct flights to 9 Arab countries, with extensive connections with GCC countries, in particular.

4. The Vision Forward

India-Arab relations are founded on strong traditional ties and deepening political understanding. Our economic relations have to be stepped up to a higher level to match the strategic partnership and strong momentum in bilateral understanding at the political level. There is huge potential in the growing Arab economies while many Arab countries have FTAs with EU and USA. Arab countries and Indian businesses can both benefit by participation in economic growth and development.

The key elements of our future endeavours may focus on:

First, Aatmanirbhar Bharat provides a vision of India’s plans to become a US$5 trillion economy by promoting Make in India - Make for World through integration with the global economy. The thrust in future will be on joint ventures in infrastructure and manufacturing, tapping Arab Sovereign Wealth Funds and integrating into supply chains. Another focus will be on innovation and start-ups, such that entrepreneurial collaborations that are future oriented. The success of Indian start-ups in IT, e-commerce, hospitality, logistics and others can leverage higher growth in India-Arab economic ties.

Second, New Emerging Technologies, especially in ICT, consultancy, fin-tech, logistics, edutech, healthtech and others have enormous potential. These will promote efficiencies and leverage future growth and development. Further, cooperation between Centres of Excellence on Industrial Revolution 4.0 will stimulate continued growth. In some ways, we need to transform a segment of our economic interaction to an "ahead of the curve” partnership focused on technology collaboration, R&D and high capital intensive projects that drive future oriented growth.

Third, High Technology cooperation, especially in defence and space has potential to be stepped up. We have cooperation agreements in both sectors with most Arab countries. With the increased participation of private sector in these areas, the potential for cooperation is much higher. In defence sector, we can expand equipment and armament export. In space sector, there is potential for training, launch of satellites, sharing of satellite data etc.

Fourth, Indian business may explore venturing into less-explored markets, which can yield great dividends. The current focus of Indian business is for trade, investment and technology exchanges with GCC, Egypt and Israel, which are the larger economies. While these can be expanded further, there is large untapped potential in other countries, for example, Iraq (hydrocarbon, construction, medical), Syria (construction, medical, education), Algeria (construction, defence), Morocco (manufacturing, FMCG, tourism), Jordan (mining, tourism), Sudan (energy, mining, medical).

Fifth, high-level exchanges between India and the Arab world have promoted deeper understanding and cooperation. This is an opportune moment for business community to develop deeper links, based on each other’s national priorities and development plans. Cultural exchanges will promote goodwill among the people and facilitate economic engagement.

With both India and the Arab region engaged in reforms and transformational changes in the economy, the strong political understanding and goodwill between the peoples provides tremendous potential to take economic engagement to a higher level.

Thank you.

New Delhi
September 21, 2020

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