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India Saudi Economic Relations

India Saudi Economic Relations

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Published by Aamir Mughal
India Saudi Economic Relations
India Saudi Economic Relations

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Published by: Aamir Mughal on Mar 15, 2014
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India – Saudi Arabia Economic Relations

Fact Sheet: Saudi Arabia
Capital GDP (official exchange rate) GDP (PPP) GDP (real growth rate) GDP (composition by sectors) : Riyadh : US $ 657 bn (2012 est.) : US $ 740.5 bn (2012 est.) : 6% (2012 est.) : Agriculture: 2%, Industry: 66.9% and Services: 31.1% (2012 est.) : 26,534,504 (July 2012 est.) : wheat, barley, tomatoes, melons, dates, citrus; mutton, chickens, eggs, milk : crude oil production, petroleum refining, basic petrochemicals, ammonia, industrial gases, sodium hydroxide (caustic soda), cement, fertilizer, plastics, metals, commercial ship repair, commercial aircraft repair, construction : US $ 381.5 bn (2012 est.) : petroleum and petroleum products 90% : Japan 13.9%, China 13.6%, US 13.4%, South Korea 10.2%, India 7.8%, Singapore 4.8% (2011) : US $ 136.8 bn (2012 est.) : machinery and equipment, foodstuffs, chemicals, motor vehicles, textiles : China 12.8%, US 11.9%, Germany 7.1%, South Korea 6%, Japan 5.6%, India 4.9%, Italy 4.1% (2011)

Population Agriculture – Products

Industries

Exports Major Export Commodities Export Partners

Imports Major Import Commodities

Import Partners

Economy Overview
Saudi Arabia has an oil-based economy with strong government controls over major economic activities. It possesses about 17% of the world's proven petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in OPEC. The petroleum sector accounts for roughly 80% of budget revenues, 45% of GDP, and 90% of export earnings. Saudi Arabia is encouraging the growth of the private sector in order to diversify its economy and to employ more Saudi nationals. Diversification efforts are focusing on power generation, telecommunications, natural gas exploration, and petrochemical sectors. Over 5 million foreign workers play an important role in the Saudi economy, particularly in the oil and service sectors. Saudi officials are particularly focused on employing its large youth population, which generally lacks the education and technical skills the private sector needs. Riyadh has substantially boosted spending on job training and education, most recently with the opening of the King Abdallah University of Science and Technology - Saudi Arabia's first co-educational university. Saudi Arabia’s economy grew 6.8 percent last year after raising its 2013 expenditure target by almost a fifth to a record 820 billion riyals ($219 billion). Saudi Arabia suffered from its highest annual inflation rate of 9.9 per cent in 2008 because of a surge in food prices and rents, strong domestic demand and a weakening in the US dollar, to which the riyal is pegged. The rate stood at around 4.5 per cent in 2012 and is forecast to slip to nearly 4.3 per cent in 2013, one of its lowest levels in eight years. As part of its effort to attract foreign investment, Saudi Arabia acceded to the WTO in December 2005 after many years of negotiations. The government has begun establishing six "economic cities" in different regions of the country to promote foreign investment and plans to spend $373 billion between 2010 and 2014 on social development and infrastructure projects to advance Saudi Arabia's economic development.

Bilateral Relations: India – Saudi Arabia
India and Saudi Arabia are old business partners. Our trade relations date back tens of centuries. Today, the bilateral business ties are being steadily expanded and further strengthened by continuous interaction and cooperation, including regular exchange of business delegations. Besides being a major trade partner, India sees the Kingdom as an important economic partner for investments, joint ventures, transfer of technology projects and joint projects in third countries. Indo-Saudi business relations are growing strongly reflecting the inherent strength and complementary nature of the two economies. The various occasions for high-level dialogue on business matters and regular exchange of delegations have established a sound basis for a constructive, mutually beneficial relationship. In the recent times, the historic visit of King Abdullah to India in 2006 resulted in signing of ‘Delhi Declaration’ imparting a fresh momentum to the bilateral relationship. The visit provided the framework for cooperation in all fields of mutual interest. The reciprocal visit by Prime Minister Dr. Manmohan Singh to Saudi Arabia in 2010 raised the level of bilateral engagement to ‘Strategic Partnership’ and the ‘Riyadh Declaration’ signed during the visit captured the spirit of enhanced cooperation in political, economic, security and defence realms Bilateral Trade Indo-Saudi bilateral economic relations are on the upswing and with the privatization and diversification of the Saudi economy underway in a big way, it offers innumerable opportunities for Indian companies and investors. Indo-Saudi economic relations have shown remarkable growth with bilateral trade registering three-fold increase in the last five years. Saudi Arabia is the 4th largest trade partner of India and the bilateral trade was USD 36 billion in 2011-12. The import of crude oil by India forms a major component of bilateral trade with Saudi Arabia being India’s largest supplier of crude oil, accounting for almost one-fifth of its needs. Saudi Arabia is the 14th largest market in the world for Indian exports and is destination of more than 1.86% of India’s global exports. On the other hand, Saudi Arabia is the source of 6.35% of India’s global imports. For Saudi Arabia, India is the 5th largest market for its exports, accounting for 7.80% of its global exports. In terms of imports by Saudi Arabia, India ranks 6th and is source of around 4.9% of Saudi Arabia’s total imports.

Bilateral Trade (in million US $) Year ( April – March) 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 Imports from Saudi Arabia 19470 19972 17098 20385.28 31060.10 Exports to Saudi Arabia 3711 5110 3907 4684.40 5683.29 6859.69 Total trade 23181 25082 21005 25069.68 36743.40 31639.61

2012-2013 (Apr-Dec) 24779.92 Source: Department of Commerce, GOI

Non Oil Trade between India Saudi Arabia (in million US $) Year Imports from Saudi Exports to Saudi ( April – March) Arabia Arabia 2006-2007 2007-2008 2008-2009 2009-2010 1071.55 1774.02 2008.50 1787.72 2521.57 3077.09 3810.95 2939.34 4551.64

Total trade 3593.12 4851.11 5819.45 4727.06 7009.83

2010-2011 2458.19 Source: Embassy of India, Riyadh Top items of Exports from India:

Main Indian exports include Mineral Fuels, mineral oils and products thereof; cereals; nuclear reactors, boilers; electrical machinery and equipment; Iron and steel; organic chemicals; meat and edible meat offal; articles of Iron or steel; articles of apparel and clothing accessories; etc. Top items of Imports by India: India’s major imports from Saudi Arabia are Mineral Fuels, mineral oils and its products; organic chemicals; plastic and its articles; inorganic chemicals; fertilizers; aluminium and its articles; iron and steel; copper and its articles; miscellaneous chemical products; raw hides and skins (other than furskins) and leather; etc.

Bilateral Investments
The bilateral investment between the two countries is growing steadily. Since mid-2000, a number of Indian firms have taken advantage of the new Saudi laws and established joint venture projects or wholly-owned subsidiaries in the Kingdom. According to Saudi Arabian General Investment Authority (SAGIA), as of 31.01.2006 to 31.12.2010 it has issued 426 licenses to Indian companies for joint ventures/100% owned entities, which are expected to bring total investment of US$ 1624.60 million in Saudi Arabia (as per latest figures available). These licenses are for projects in diverse sectors such as management and consultancy services, construction projects, telecommunications, information technology, pharmaceuticals, etc. Moreover, several Indian companies have established collaborations with Saudi companies and are working in the Kingdom in the areas of designing, consultancy, financial services and software development. {On 12.12.12, Tata has signed a letter of intent to establish factory in Saudi Arabia to produce 50,000 Land Rovers a year by 2017. The initial investment is estimated at US$1.2 billion} On the other hand, Saudi Arabia is the 45th biggest investor in India with investments from April 2000 to December 2012 amounting to US$ 40.90 million. There are a number of Indo-Saudi joint ventures or Saudi owned companies in India, in diverse fields such as paper manufacture, chemicals, computer software, granite processing, industrial products and machinery, cement, metallurgical industries, etc. There are opportunities for Indian businessmen and companies in sectors like construction industry, petro-chemicals and health & pharmaceuticals in Saudi Arabia while similarly attractive opportunities are there for Saudi businessmen and companies in sectors like infrastructure and real estate in India.

Bilateral Agreements
              MoU for Foreign Office Consultations MoU on the Establishment of Joint Business Council between Council of Saudi Chambers of Commerce and Industry (CSCCI) and Federation of Indian Chambers of Commerce & Industry (FICCI) Bilateral Promotion and Protection of Investments (BIPA) Agreement on Avoidance of Double Taxation and Prevention of Tax Evasion (DTAA) MoU on Combating Crime Agreement in the field of Youth and Sports MoU of Scientific and Educational Co-operation between the Ministry of HRD, India and Ministry of Higher Education, KSA Extradition Treaty Agreement on Transfer of Sentenced Persons MoU for Cooperation in Peaceful Use of Outer Space Agreement on Scientific and Technological Cooperation MoU between Centre for Development of Advance Computing (C-DAC) and King Abdulaziz City for Science & Technology (KACST) on cooperation in Information Technology and Services Agreement on News Cooperation between Saudi Press Agency (SPA) and Press Trust of India (PTI) MoU on Cultural Cooperation

Indian Companies in Saudi Arabia
1. Air India 2. New India Assurance Co. 3. LIC International 4. Saudi Indian Insurance Co. 5. Telecommunications Consultants India Ltd 6. Wipro Ltd 7. Tata Motors Ltd 8. Tata Consultancy Services 9. Larsen & Toubro Saudi Arabia LLC 10. Saudi Al-Terais Co. 11. 3i Infotech 12. Dayim Punj Lioyd Contracting 13. Lulu Saudi Hypermarkets LLC 14. Polaris Software Lab Ltd. 15. Nesto Hyper Market 16. Star Printing Press 17. S.J. Iron & Metals 18. Godrej & Boyce Mfg. Co. ltd. 19. Dar Arms International Contracting Establishment 20. Arc Advertising 21. JN Holding Company 22. Sona Jewellers 23. Al Kabeer 24. Zamil Birla Technical Services Co. Ltd. 25. Adroit Systems 26. Mohammed S. Q. Qureshi Est. 27. Wareef 28. Mohammad Ali Patel Computer Establishment 29. Branch Kab India Projects and Construction Pvt. Ltd. 30. Branch Hindustan Construction Co. Ltd. 31. Rolta Saudi Arabia Ltd. 32. Tariq Masood Ltd. Co. 33. Atlas Jewellery House 34. Mohammad Aliyar Galvanization & Iron Manuf. Co. 35. Al-Samsaq Perfumeries and Cosmetics Factory 36. Aslam Ansar Ansari Quilt and Pillow Factory 37. Kalanthoor Contracting 38. Dalal lkhair Aluminium Factory 39. Sufaian Mahmood Sayed Est.

40. Allied Technical Co. 41. Al-Rumeda Decorations and Gypsum works Ltd. 42. Three Lions Factory 43. Union Coils Industries 44. Tradewell Co. 45. Branch Kab India Projects and Construction Pvt. Ltd. 46. Basem International Shipping & Logistics Co. Ltd. 47. Al Jazeera Ambition factory Co 48. ATEICO Communications 49. Jet Airways 50. Mr. Dawood Ahamed Halwanee & Sons Co. 51. ITL World / Eram Group 52. Middle East Co. Ltd. 53. Jaquar & Co. Pvt. Ltd. 54. Asmacs Cont. Est. 55. Jeddah National Hospital 56. Simplex Infrastructure 57. State Bank of India 58. International Business Unit, Emco Limited 59. ION Exchange 60. Delcam-Terraze Engineering 61. Engineers India Ltd. 62. Shapoorji Pallonji Mideast 63. M/s CAD Middle East Pharmaceutical Industries LLC 64. Aloula Geojit Capital 65. Alukkas Jewellery 66. AFCONS Infrastructure Limited 67. MKCL Arabia Limited 68. Saudi Ensas Company 69. NewMark Consultants ME 70. ITL Leisure Tourism & Travel Company 71. Arabian Power Electronics Company (APEC) 72. Hydrofit Arabian Equipment Co 73. Malabar Gold

FICCI’s engagement with Saudi Arabia
To boost the economic and business cooperation between India Saudi Arabia, FICCI’s engagement with Saudi Arabia has been deep rooted. Engagement with private sector FICCI closely works with Council of Saudi Chambers, Riyadh Chamber of Commerce, Akshariya Chamber of Commerce (Chamber of Commerce of the Eastern Province of Dammam) and Riyadh Chamber of Commerce through exchanging business delegations and Joint Business Council Meetings (the last JBC meeting was held on 4 January, 2012 at Federation House, New Delhi. Engagement with the Government/ High powered visits FICCI is in touch with Saudi Arabia General Investment Authority (SAGIA) and has being interacting regularly with their top brass with respect to the investment opportunities being made available to Indian businesses from time to time. FICCI coordinated the programme of the Indian CEOs delegation to KSA accompanying Dr Manmohan Singh, Hon’ble Prime Minister of India in February, 2010. FICCI also coordinated the business interactive programme organized on the occasion of the visit of the Governor of Riyadh in April, 2010 at New Delhi. FICCI organized an exclusive business interactive meeting with H E Abdullah Bin Alireza, Hon’ble Commerce & Industry Minister of Kingdom of Saudi Arabia in FICCI, Federation House in Nov, 2010. Engagement with Government Agencies Saudi Aramco and Saudi Basic Industries Corporation (SABIC) have been regularly participating in FICCI events (JBC’s, Saudi Delegations, Arab Conclaves).

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