TRADE RELATIONS BETWEEN INDIA

AND SAUDI ARABIA

INTRODUCTION What is trade?Trade refers to the exchange of goods and services. It may be internal or external.What is International trade?It refers to the exchange of goods and services among different countries.

SAUDI ARABIA’S ECONOMY Major exports: Petroleum oils, crude (77%)

Petroleum oils, refined (6%) Polymers of ethylene,in primary

forms(3%) Petroleum gases (2%) Acyclic alcohols(2%)

Major imports: Cars(7%) Medicaments, packaged(3%) Iron ores and concentrates(2%) Automatic data processing

machines(2%) Transmission apparatus for radio,

telephone and TV(2%)

Major trade partners(exports):Asia, NES (37%)North and Central America (8%)Japan (7%)China (7%)United States (7%)

Major trade partners(imports): China(14%) Germany(10%) Japan(9%) Korea Republic(6%) United States(6%)

Saudi is an oil-based economy.Strong government control over

economic activities.18% of world’s petroleum reserves.Largest exporter of petroleum.

INDIA’S ECONOMYMajor exports: Petroleum oils, refined (15%) Diamonds(11%) Iron ores and concentrates(4%) Jewellery of precious metals(3%) Medicaments, packaged(3%)

Major imports: Petroleum oils, crude(21%) Diamonds(9%) Coal; briquettes(5%) Gold(5%) Petroleum oils, refined(2%)

Major trade partners(exports): United States(12%) United Arab Emirates(11%) China(8%) Hong kong(4%) Singapore(4%)

Major trade partners(imports): China(12%) United Arab Emirates(8%) United States(5%) Australia(5%) Saudi Arabia(5%)

Since liberalization, the value of India’s international trade has increased;GDP rising from 16% in 1990-91 to 47% in 2008-010.

By 2010, exports increased to 22.3% , while imports increased by 7.5%.

HISTORY India and Saudi share a BILATERAL

relationship. Trade between the two countries

dates back to third millennium B.C. Arab traders held a monopoly over

‘spice trade’ between India and Europe.

Since its independence, India has sought to maintain strong ties with Saudi Arabia.

Bilateral InvestmentProgressive growth has been observed

between the countries after Liberalization policy of India in 1991.

Saudi Arabia is ranked 15th position in country-wise FDI joint venture in India and 2nd among Arab countries.

Saudi Arabia has invested 422.1 million INR during 1991 to 99 and 690.71 million INR during Jan 2000 to 08

Investment is observed in diverse fields such as paper manufacture, chemicals, computer software ..etc

India is the sixth biggest foreign investor in the Kingdom with investments exceeding US $470 million in nearly 100 joint ventures or 100 % Indian owned counties in Saudi Arabia in sectors such as Power, Construction, IT and many others…

Saudi Arabia invited Indian businessmen to invest in special areas of telecommunication, mining, energy and power, agriculture..etc

Trade agreements & Associations.

A trade agreement ( Trade Pack) is a wide ranging tax, tariff and trade pact often includes investment guarantees.

In order to improve trade relations between India & Saudi Arabia on March 1, 2010 signed 5 important trade agreements.

Extradition treaty

Agreement on the transfer of sentenced persons

Agreement on Scientific co-operation

Memorandum of Understanding (MOU) between Indian Space Research Organization (ISRO)

MOU on co-operation in science and technology for joint research and development

MOU on Cultural co-operation

Non-Governmental and other agreements include:

MOU for foreign office consultationsBilateral promotion and protection

investments (BIPA)Agreement on avoidance of double taxation

Trade AssociationsTrade associations, also known as an industry

trade group or business association is an organization founded and funded by businesses that operate in a specific industry.

Some of the trade associations which are established are between the two countries are

a) Association of Malyali Professionals in Saudi Arabia (2004)

b) ‘‘Pleace India’’ (non-profitable, non-political movement)

Exports and ImportsSaudi Arabia is the 4th largest trading partner for

India. The value of the two-way trade between the two countries in 2011-12 exceeded US $36 billion. Saudi Arabia is the 14th largest market in the world for Indian exports and is the destination of more then 1.86% in the 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 7.55% of its global exports.

India’s imports and exports with Saudi Arabia.

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India’s Imports from Saudi  Arabia

India’s Exports to Saudi Arabia

Major Indian Exports to Saudi Mineral Fuels

Mineral Oils

Cereals

Nuclear reactors

Boilers

Electrical Machinery & equipment

Iron & steels

India’s Major Imports from Saudi Organic Chemicals

Plastic and its articlesInorganic chemicals

Fertilizers

Aluminum

Iron and Steel

Copper

Balance of TradeWhat is Balance of trade??Balance of Trade of the difference between a

country’s imports and its exports. i.e, Exports Imports What is Trade Deficit?A country has a trade deficit if it imports more

than its exports. i.e, Imports ≥ ExportsWhat is Trade Surplus? A country has a trade surplus if it exports more

than its imports. i.e, Exports ≥ Imports

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Balance of Trade

Balance of Trade

Balance of PaymentWhat is balance of Payment? It is a record of all the transactions made

between one particular country and all other countries during the specified period of time.

Current account balance in Saudi Arabia

Current account balance IN India.

ConclusionThe frequency of high-level official exchange

must be improved so that political understanding improves.

Both sides must show eagerness to open more areas for co-operation.

High-Level military exchanges, joint training of trrops & high use of training courses must be encouraged.

Both sides should refrain from taking steps that could harm the interests of the other sides.