By Reaven D’Souza
Managing Editor
India and the six-nation Gulf Cooperation Council (GCC) states share historical ties dating back hundreds of years that were founded on trade, social and cultural relations that have endured and grown stronger through the centuries. Historical ties between the two entities are further buttressed by geographical linkages, with the GCC being part of the ‘immediate neighborhood’ of India and sharing the waters of the Arabian Sea that connects all their shores.
Today, India and the GCC are working towards greater synergy and enhanced cooperation, by energizing and revitalizing their traditional ties and imparting a new impetus to their relations. This renewed dynamism provides an opportunity to engage creatively and act effectively to realize significant mutual benefit for people of the region and for greater global good.
It is against this new-found dynamism that a new international forum, the Arabian Sea Dialogue (ASD) 2022 is being held on Tuesday, 27 September in Mumbai, India. The ASD 2022 brings together government policymakers, private sector business leaders, intellectuals and academicians, media voices and representatives from institutions and civil society organizations, as well as the youth in the region to debate and ideate on topical issues of relevance to the two sides.
According to the organizers of the ASD 2022, the India-based Observer Research Foundation, the Dialogue will deliberate “on a blueprint for an ‘Arabian Sea Community’ to shape and reinvigorate the vibrance, passion, and potential among the peoples of India and the Gulf, which is provided, nourished and united by their shared connection, the Arabian Sea”.
Among the pertinent issues and concerns to India and the GCc, the 2022 iteration of the Arabian Sea Dialogue will deliberate on:
Geopolitics and Security: Ever since the discovery of oil in the region and the ensuing geo-political upheavals in the Middle-East, the Gulf states have been crucial to international politics and economics, and in balancing global power and influence in the region. However, recent developments, including the emergence of China as a new player on the block, the COVID-19 pandemic and its repercussions, the evolving Russia-Ukraine conflict, and ongoing discussions over the Joint Comprehensive Plan of Action (JCPOA) between Iran and Western powers, are shaping new security dynamics in the region.
The GCC states are understandably keen to hedge their bets and are looking at pushing forward the idea of ‘strategic autonomy’, even as major powers involved in the region reassess their priorities. Amid this changing political paradigm in what is no doubt a historically fraught geographical region, the ASD 2022 will deliberate on how best the GCC can respond to this new security environment, and on how India can help in mitigating and stabilizing the challenges.
Investments, Financial Flows and Trade: The relationship between India and the GCC has fundamentally changed in recent years, with traditional trade in food and hydrocarbon supplies being supplemented by increasing economic and investment engagements. The recently concluded Comprehensive Economic Partnership Agreement (CEPA) with the UAE, and a wider Free Trade Agreement (FTA) that is being negotiated with GCC, attest to this advancing relationship.
Additionally, the emergence of global value chains and supply chains has allowed the two regions to integrate further and reap the benefits of their comparative advantages. Against this backdrop, the Dialogue will ponder on how India and the GCC can reshape their economic relationship through the value chain approach, as well as how digital technologies can be harnessed to bolster the resilience of the supply chains in the region.
Climate Cooperation: The GCC region in particular is prone to vulnerabilities brought on by climate change related events. It will also decisively influence the regional geopolitical fabric and shape the choices facing India and the GCC nations in the years ahead. A shared strategy to deal with energy transition, and a renewed focus on green mobility and finance mobilization is considered essential for the success of the global fight against climate change. Sustainable investment choices will also affect the future of jobs and growth in the region.
The Dialogue is expected to discuss what guiding principles should define the evolution of India-Gulf climate cooperation, as well as which sectors should assume priority. The discussions will also focus on solar and wind power, and other renewable energy sources that can be harnessed to galvanize energy transition in India and the Gulf region. The gathering is also expected to ideate on how climate cooperation between India and the Gulf can be maneuvered to positively influence climate justice at the upcoming COP 27.
Youth, Inclusion and Innovation: The transformative potential of people in the region is immense and well documented, with women and youth often at the forefront of such transmutations. As the world changes rapidly and in transformative ways, how India and the GCC engage, harness, and empower this constituency will determine and shape their collective future. Youth capital, inclusivity and innovation will be a focus of discussion at the ASD 2022, along with ways that India and the GCC can reorient their policies and practices to further promote gender equity and women leadership, so as to secure a shared prosperous future.
On the innovation front, while India has the third-largest startup ecosystem in the world and is among the top countries in producing unicorns — a startup company valued at over US$1 billion — the GCC region has been aggressively leveraging technologies and innovation to create a new economic future. There is potential for unprecedented collaboration between India and the GCC in this domain. An India-GCC digital bridge that harnesses the knowledge, experience, and talent synergies can transform the region into a global ideas and innovation hub in fintech, edtech, healthtech, and frontier technologies. This collaborative approach can form the foundation of shared prosperity of the region and beyond.
The ASD 2022 also will explore how the synergies that exist, or can be nurtured, between India and the GCC could be leveraged to promote innovations that are social, sustainable and responsible. All three could involve structured innovations as well as more grass-roots originated ones built on India’s famed ‘Jugaad’ — a term used to describe non-conventional approach to problem-solving that uses limited resources in innovative ways. Among the focus areas in which innovative solutions could be developed are, in ameliorating water scarcity, combating aridification, developing renewable energy, and in ensuring health and food security.
Additionally, the increasing investment and trade between India and the GCC will feature largely during the Dialogue and in discussions leading to the ASD 2022. Especially given that India’s ties to the GCC in trade, investment, energy, manpower, political and food security among others have a tremendous potential for growth in the years ahead.
Data show that India’s economic linkage with the GCC have increased steadily in recent years, in particular due to growth in hydrocarbon imports from the region. Total bilateral trade between India and the GCC in the 2019-20 period stood at US$121 billion, of which Indian exports to the GCC, largely agriculture products, accounted for 34 percent, or around $40.5 billion of the total trade, while Indian imports from the GCC, largely hydrocarbon products, constituted 64 percent or $80.5 billion.
According to the latest report from the Federation of Indian Export Organizations (FIEO), the apex body of India’s export promotion councils, in the 2021-22 fiscal year that ended on 31 March 2022, Indian exports to the six GCC states increased by 44 percent to about US$43.9 billion, compared to previous fiscal’s $27.8 billion.
Exports to the United Arab Emirates (UAE), India’s second largest trade partner and the largest in terms of exports soared to $28 billion from $16.7 billion in the 2021 fiscal. Moreover, the increase in exports was not limited to the UAE, exports to all six countries of GCC witnessed a hike in the last fiscal. In fiscal year 2021-22, exports to Saudi Arabia grew by 49 percent, Oman by 33 percent, Qatar by 43 percent, Kuwait by 17 percent and exports to Bahrain increased by 70 percent.
In this regard, it is noteworthy that India and the UAE signed the Comprehensive Economic Partnership Agreement (CEPA) in February this year, which came into force only on 1 May 2022. The CEPA is expected to spur dramatic increases in Indian exports to the UAE in the years ahead, as ‘zero-duty’ access for Indian products to the UAE, is expected to expand over the next 5-10 years to 97 percent of UAE tariff lines, or 99 percent of Indian exports by value.
Latest available figures comparing Indian exports to the GCC before, during and after the global pandemic, also paints an interesting picture of how trade with the UAE has grown beyond just hydrocarbon imports by India, and how Indian exports have widened to encompass a multitude of products other than agriculture. The data reveals that exports from India to the UAE accounted for 49 percent of the total of $59 billion in fiscal year 2019-20, before falling to 39 percent of the total of $43 billion in trade during the next fiscal due to the then prevailing global pandemic, before picking up again in fiscal 2021-22.
Clearly there is tremendous scope for trade between India and the GCC to improve even more, and in goods other than traditional hydrocarbons from the GCC and agricultural products from India. This is especially so, if the two entities enter into the long-awaited Free Trade Agreement (FTA) that is currently being negotiated, or if the remaining five nations of the GCC ink separate Comprehensive Economic Partnership Agreements (CEPA) with India similar to that with the UAE.
Compared to multilateral trade agreements such as an FTA with the GCC, bilateral trade agreements such as CEPA with the UAE, are negotiated more easily, because only two nations are party to the agreement. Bilateral trade agreements also reap trade benefits faster than multilateral agreements. However, new bilateral agreements often result in competing agreements between other countries, eliminating the advantages that a FTA confers between India and the GCC.
In addition, cooperation between India and the GCC has scope to widen beyond the traditional spheres of investments, trade and commerce, and the development of human resources, to support their shared desire for political stability and security in the region. The two are also well placed to strengthen cooperation in emerging technologies such as artificial intelligence, the internet of things and the fourth industrial revolution, as well as in new frontiers such as in space and deep sea exploration, and renewable energy sources among others. Leadership in India and the GCC need to pursue the potentialities presented by the new world order.
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