Why Are Gulf Countries Important To India?

Why Are Gulf Countries Important To India?
In terms of trade, India and the Gulf nations share close historical ties since the 5th century | Representational image source: Arab News

The repercussions of the prophet row are still haunting the PM Narendra Modi-led Bharatiya Janata Party (BJP) government. It has been almost three weeks since the BJP suspended its national spokesperson Nupur Sharma, and expelled Delhi media head Naveen Kumar Jindal, over remarks on Prophet Muhammad.

On Monday, Pakistan, on behalf of the Organisation of Islamic Cooperation (OIC), raised the controversy at the United National General Assembly (UNGA), saying that India has hurt 1.5 billion Muslims all over the world. “If such incidents are left as it is, it will affect peace and development. This can lead to conflict situations, increase religious tensions and also lead to widespread human rights violations,” said Pakistan’s Permanent Representative to the UN Munir Akram, in his statement.

The BJP’s tough stance against its two leaders came after a major diplomatic backlash from oil-rich countries. Bahrain, Iran, Kuwait, Oman, Qatar, Saudi Arabia, the UAE, and other Arab countries strongly objected to the BJP leaders’ remarks, and summoned India’s envoys to demand a public apology from the Government of India.

Being a major trading partner, India considers the Gulf extremely important, which plays a significant role in the growth of the country’s economy. Why are the Gulf nations important to India?


According to Petroleum Minister Hardeep Singh Puri’s statement in the parliament, more than 60 percent of India’s crude oil comes from Gulf nations. 

By the end of March 2022, India’s total imported oil from the Gulf stood over 212 million metric tonnes. Iraq, with around 25 percent, and Saudi Arabia, with nearly 20 percent, are the top crude oil suppliers to India. Kuwait and the UAE are also emerging Gulf countries in terms of providing oil to India. 

India is highly dependent on Qatar for its Liquefied Natural Gas (LNG). According to a report, Qatar sells 7.5 million tonnes of LNG a year to India, at an indexation of 12.67 percent of the prevailing Brent price, plus $0.52 per mBtu (million British thermal unit).


More than 13 million Indians live in Gulf countries, and send most of the remittances to India. Saudi Arabia, which welcomes most Indians to its nation, has one-third Indian population in its country. 

Last year, India received 87 billion dollar in remittances from abroad, of which more than 50 percent of remittances came from the Gulf Cooperation Council (GCC) that comprises Bahrain, Iran, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE. The UAE accounted for 26.9 percent remittances, followed by Saudi Arabia (11.6 percent), Qatar (6.4 percent), Kuwait (5.5 percent) and Oman (3 percent). Beyond the GCC, remittances from the US accounted for 22.9 percent, second only to the UAE.


In terms of trade, India and the Gulf nations share close historical ties since the 5th century, when Arab merchants and traders used to travel to India via sea routes to enjoy Indian markets. The trade relationship between India and the Gulf has always been an important aspect, and thus, it has only improved over the past several decades. 

During 2021-22, India’s export to the six GCC countries increased by $44 billion compared to nearly $28 billion in the previous year. During the same time period, India’s total import to GCC countries was more than $110 billion. India’s export to the Gulf countries increased by more than 58 percent in 2020-21.

India imports oil and natural gas from the Gulf region, and mainly exports food items, rice, buffalo meat, rice, sugar, fruits and vegetables. Additionally, India also exports chemicals, jewellery, iron, steel, precious stones, and electronic machinery to the countries. 

Iraq, Saudi Arabia, and the UAE are the top trading partners of India, after China and the United States. According to a Reuters report, India’s trade with the Gulf countries stood at around $90 billion in 2020-21. The trade between India and the UAE has seen a significant increase in the last couple of years. Last month, in May, the free trade between India and UAE came into force, and is expected to reach a value of $100 billion by 2026.


Read more: Islamic State Claims Attack On Kabul Gurdwara, Cites Prophet’s “Insult” By BJP Functionaries



On the investment front, a significant rise can be seen between India and the Gulf countries over the past few years. Saudi Arabia is the foremost in the GCC, for showing interest in investing in India.

According to government data, several billion dollars have been invested in Indian start-ups by a few top companies from the kingdom, including ARAMCO, SABIC, ZAMIL, E-holidays and Al Batterjee Group. Saudi Arabian companies have also invested in Indian companies such as Delhivery, FirstCry, Grofers, Ola, OYO, Paytm and PolicyBazaar.

Recently, Saudi’s PIF (Public Investment Fund) announced an investment of approximately US$1.3 billion for an equity stake of 2.04 percent in Mukesh Ambani’s Reliance Retail Ventures Limited.

Apart from them, India and Saudi’s sector-wise collaboration can also be seen in hydrocarbons, energy, automotive and machinery, pharmaceuticals, textile, food security, health care, defence, and many more.

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