India - Saudi Arabia: MBS, Modi Participate in First Strategic Council Meeting
STORIES, ANALYSES, EXPERT VIEWS
Saudi Crown Prince Mohammed bin Salman completed a state visit to India last week after participating in the G20 Summit, to review bilateral ties and cooperation in areas ranging from energy to security.
The de facto Saudi ruler, who also holds the post of prime minister, held talks with Prime Minister Narendra Modi during the day-long visit.
The two leaders chaired the first meeting of the Strategic Partnership Council. Prime Minister Modi and the Saudi leader had co-chaired the first meeting of the Strategic Partnership Council that was established in October 2019.
The two countries decided to expedite implementation of the USD 50 billion West Coast refinery project, and identified energy, defence, semiconductor and space as areas for intensified cooperation during talks between the two leaders.
Opening remarks: In his opening remarks at the Saudi-Arabia Strategic Partnership Council meeting, Prime Minister Modi said the relationship between the two countries is crucial for regional and global stability.
In his opening remarks, Saudi Crown Prince Mohammed recognised the substantial impact of the Indian community residing in Saudi Arabia, comprising 7% of the Saudi population. He reiterated that Saudi Arabia considers them an integral component of the nation. “We consider them to be a part of Saudi Arabia. We watch and take care of them like we take care of our own citizens.”
India-Middle-East economic corridor: At the start of the meeting, Modi described Saudi Arabia as one of India’s most important strategic partners. Earlier, India and Saudi Arabia were joined by the United States and the European Union in launching an ambitious plane for an economic corridor linking Indian ports through shipping and rail links to Europe via the Gulf region.
In bilateral talks, the two sides welcomed the launch of the India-Middle-East economic corridor.
Saudi Arabia is one of India's key strategic partners in the Middle-East. The overall relations between the two countries have witnessed a significant upward trajectory in the last few years.
Eight pacts signed
In the talks, the two sides agreed to diversify the current status of their hydrocarbons relationship into a "comprehensive energy partnership" and inked eight pacts to boost cooperation in a range of areas including digitisation and investment. The eight pacts were for cooperation in a range of areas including investment, digitisation, and saltwater desalinisation.
Security cooperation and combating terrorism: A joint statement said both sides also stressed the importance of strengthening security cooperation to combating terrorism and its financing.
Emphasising that terrorism, in all its forms, remains one of the "gravest threats" to humanity, the two sides agreed that there cannot be any justification for any act of terror for any reason whatsoever.
They rejected any attempt to link terrorism to any particular race, religion or culture and called on all States to reject the use of terrorism against other countries, dismantle terrorism infrastructure where it exists and bring perpetrators of terrorism to justice swiftly.
Strengthening defence partnership: The two sides have been focusing on strengthening their defence and security partnership. The then Chief of Army Staff, General MM Naravane, visited Saudi Arabia in December 2020 in the first-ever visit by a head of the 1.3 million-strong Army to the important Gulf nation.
Since then, there have been series of visits of high-ranking military officials between the two sides.
MEA briefing
A major focus of the talks was enhancing energy cooperation. "Both sides extended their full support to the early implementation of the West Coast refinery project, which is a trilateral cooperation between ARAMCO, ADNOC and Indian companies," Ausaf Sayeed, secretary (overseas Indian affairs) in the External Affairs Ministry, said.
West Coast Refinery: Sayeed said both Prime Minister Modi and Crown Prince Bin Salman extended their "full support" to the early implementation of the West Coast refinery project for which funds to the tune of USD 50 billion are already earmarked.
"The two sides agreed to set up a joint task force to help in identifying and channelising the USD 100 billion investments which was promised by the Saudi side half of which was for the refinery," he said.
The West Coast Refinery project is to come up in Maharashtra. The West Coast refinery project, initially unveiled in 2015, is a joint project between ARAMCO, ADNOC, and Indian companies.
The two sides also decided to have a monitoring committee to ensure that the refinery projects are done according to the plans laid out by both the sides.
The joint statement issued after the talks said the “two sides agreed to develop joint projects to transform oil into petrochemicals in the two countries, and providing the necessary support, requirements and enablers to accelerate the project of West Coast Refinery”.
“The two sides agreed to explore investment opportunities in the field of fertilisers and intermediate, transformative and specialised petrochemicals in both countries,” it added.
Project so far in limbo: The ambitious project to build one of the largest refining complexes globally, writes Sukalp Sharma (Senior Assistant Editor at The Indian Express) “never really took off. Shifting political equations in the state coupled with strong resistance from sections of locals around the proposed sites in the Ratnagiri district nearly thwarted the project…”
Even so, Monday’s announcement “is significant as a signal that the project is still a priority for the Centre and the foreign partners, and has reignited hope among the project proponents, it is still unclear if and when the refinery is expected to be up and running. No doubt, it is a statement of intent from India and Saudi Arabia, but for the project to see the light of day, a lot will have to change on the ground.”
As the single biggest proposed greenfield refinery project, the West Coast refinery and petrochemicals project is a marquee element of India’s medium- to long-term refining capacity expansion strategy. India aims to increase its refining capacity to 450 mtpa from the current 250 mtpa over the next few years.
For the Saudis, “the project offers an opportunity to make inroads into one of the top and growing markets for petroleum products, offering them prospects of increasing diversification, expanding their global footprint, risk mitigation by investing in downstream petroleum segment given their heavy reliance on the upstream segment, and ensuring offtake of their oil in a major market. India depends on imports to meet over 85 per cent of its crude oil requirement….”
Other areas of cooperation
At the media briefing, MEA’s Sayeed said different areas of cooperation such as energy, defence, security, education, technology, transportation, healthcare, tourism and culture were identified in the talks between the two leaders.
The two sides also held deliberations on power grid, gas grid, optical grids and fibre networks for possible cooperation.
In the talks, both sides also agreed to explore opportunities for cooperation in the area of payment systems including the acceptance of RuPAY card in Saudi Arabia for the benefit of the Indian community in general and more particularly the Hajj/Umrah pilgrims.
Saudi Arabia’s investment plans
It is also understood that Saudi Arabia is considering setting up an office of its sovereign wealth fund (SWF) in India to facilitate investments in the country. Moreover, the country also plans on investing in Indian start-ups through venture capital.
The country’s Investment Minister, Khalid A. Al Falih said Monday that within the next few weeks, he would send a delegation to India to explore the opportunity. He added that his delegation would explore Gift City along with Mumbai and New Delhi.
Al Falih said, "I will match your offer and commit today that we will open an office in India for investment facilitation. We are talking about bi-directional (facilitation).” The Investment Minister announced this at the India-Saudi Arabia Investment Forum meet.
The Saudi Minister also highlighted his interest in investing in Indian start-ups which cater to the Saudi markets via venture capital funds. "Hopefully in the next few weeks we will create a joint agreement between our national venture capital fund and their counterpart in India to channel venture capital and funding to startups that will have the opportunity to leverage out two markets," the Investment Minister noted.
Saudi investments in India stand at $3.22 billion between April 2000 to June 2023. These investments have been made by government-owned Public Investment Fund (PIF) in Indian companies that are beyond their start-up stage.
Preparatory meetings
Earlier, in preparations for the talks, Saud Al-Sati, the Saudi deputy minister for political and economic affairs, travelled to New Delhi last month to review preparations for the visit by Mohammed bin Salman, or MBS as he is popularly known. Al-Sati, who earlier served as the ambassador to India, met Ausaf Sayeed, secretary (overseas Indian affairs) in the external affairs ministry, and reviewed the gamut of bilateral relations. The current Saudi ambassador, Saleh Eid Alhusseini, also met external affairs minister S Jaishankar.
Modi and MBS had a phone conversation in June when they reviewed bilateral cooperation and discussed ways to bolster ties in connectivity, energy, defence, trade and investment. This was the first contact between the leadership of the two countries since China brokered a rapprochement between Saudi Arabia and Iran.
Saudi Arabia has emerged as one of India’s key partners in West Asia in recent years, especially in defence, security and energy. Saudi Arabia is also home to 2.6 million Indians, one of the largest concentrations of expatriates in the region.
MBS last visited India in February 2019, and this was followed by a visit to Saudi Arabia by Modi in October the same year, when the two countries created the Strategic Partnership Council. This body has two pillars – a political, security, social and cultural committee headed by the foreign ministers, and a committee on economy and investments led by the Indian commerce minister and the Saudi energy minister.
Relationship has moved forward at a stunning pace
It is not usual for a country to host a State visit on the margins of a multilateral summit, as India did for Saudi Arabia’s Crown Prince Mohammed bin Salman. But then, writes The Hindustan Tomes “there is little that is usual about the speed at which relations between the two countries have progressed. From the creation of the Strategic Partnership Council in 2019 to the first visit by an Indian Army chief to the kingdom in 2020 and the first bilateral naval exercise in 2021, the relationship has moved forward at a stunning pace. Security ties and intelligence-sharing have increased as Saudi Arabia has sought to diversify its relationship with India, once limited to an energy partnership.”
