‘Future of Indo-Saudi relations very bright’

THE Indo-Saudi relations are passing through "a very exciting phase and the future of these relations is very bright ahead", so feels His Excellency  Mr. Kamaluddin Ahmed, Indian Ambassador to the Kingdom of Saudi Arabia. In an exclusive interview with Amitabha Sen, he said that both the countries shared a large number of areas where they can benefit from their complimentary strengths. "There are promising new horizons for Indian companies in almost all sectors of the Saudi economy, major among them being petroleum and petrochemicals, power, water, railways, roads, telecommunications, information technology (IT) and IT enabled services, pharmaceuticals and higher and technical education," he said. On the other hand, Mr. Ahmed pointed out, Saudi Arabian businessmen were increasingly becoming aware of "the rich opportunities for investment in India, where their capital, coupled with locally available state-of-the-art technologies, unmatched human resources/expertise, large and expanding market, skilled labour, etc. can bring in rich rewards".

AS: Since His Highness King Saud's maiden visit to India in 1955, the Indo-Saudi bilateral relations have emerged into a very strong and cohesive one over the past about five decades. In view of very influencing position of Saudi Arabia which enjoys about one fourth of world's proven oil reserves, what are the key factors, you feel, that are crucial to take this cementing relationship to a greater height?

HE: Indeed, India and Saudi Arabia share historical and strong friendly relations. Over the last five decades, the old ties between the peoples of the two ancient lands have been further reinforced and strengthened by active political interaction and robust economic and commercial exchanges. Today both Saudi Arabia and India are each other's major partners in trade, investment and joint ventures. The total volume of annual bilateral trade exceeds US $ 5.1 billion. Saudi Arabia's exports to India are worth more than US $ 4.1 billion with substantial oil exports and a steadily growing portion of non-oil exports. Similarly, Saudi Arabia is a large market for Indian exports which are around US $ 1 billion. Saudi Arabia continues to be the principal source of India's oil requirements; and given its substantial reserves as well as its proximity to India, it is expected to remain a major source of India's oil needs for the next few decades.

India attaches great importance to its relations with Saudi Arabia. In fact the Kingdom's geo-strategic location in the Arabian Peninsula, makes it an integral part of India's extended neighbourhood. Saudi Arabia occupies a privileged position in the Arab and Islamic worlds, having considerable influence on issues pertaining to regional and international peace and security of great interest to India.

In addition, there are shared ties of religion and traditions between the Kingdom and the 150 million strong Indian Muslim community. Two of Islam's holiest shrines, i.e. the Haram Sharief in Makkah Mukarramah and the Prophet's Mosque in Madinah Munawarrah are in Saudi Arabia, which are not only the objects of reverence for Muslims across the world, but are also the destination of over 200,000 Indian pilgrims who come to the Kingdom every year for Umrah and Haj pilgrimages. Saudi Arabia is also home to around 1.4 million Indians, the largest expatriate community in the country, whose skills, hard work and sincerity have made immense contribution to strengthening the bilateral relations.

AS: What are the key Saudi sectors where Indian companies can have an edge or can be placed at par with other nations aspiring to spread their business wings in the Kingdom?

HE: Today, India is the fourth largest economy in the world and has the second largest GDP among developing countries based on purchasing power parity coupled with a large and growing market. India's vast reservoir of knowledge resource – engineers, doctors, scientists, technicians, managers and skilled personnel – are among the best in the world. This human asset has helped India establish a solid reputation as a leader in knowledge based sectors like information technology, bio technology, space sciences, telecommunications, medicine, banking, insurance, financial services, etc. India also boasts of world class expertise in manufacturing, mining, hydrocarbon prospecting and production, energy and other areas of infrastructure development, tourism and hospitality, entertainment, healthcare, higher education and other areas in the services sector. Hence, there are promising new horizons for Indian companies in almost all sectors of the Saudi economy, major among them being petroleum and petrochemicals power, water, railways, roads, telecommunications, information technology (IT) and IT enabled services, pharmaceuticals and higher and technical education.

AS: In this connection, a special mention can be made about India's prowess in the global IT market. To what extent Indian IT firms can contribute towards the growth of IT and IT-related sectors in Saudi Arabia and what is place the Indian IT firms are holding today in the Kingdom?

HE: The Indian IT personnel and companies are renowned all over the world for their prowess in software programming and IT enabled services. In Saudi Arabia also, the India IT companies are highly respected for their IT skills and capabilities to provide whole range of IT solutions at very competitive prices. The Saudi companies are increasingly realising that they can outsource all their IT needs from Indian companies which can provide them products and skills of the highest quality at a fraction of the cost of other comparable international sources. The IT sector of Saudi Arabia holds great deal of promise for partnerships with Indian companies as a large number of Saudi companies are making large investments in adopting Information technology in their business processes. The Indian companies are increasingly aware of the potential of Saudi market, which is the biggest market not only in the Gulf, but also in the entire Middle East region. Hence, almost all major Indian IT companies are present in the Kingdom in partnership with local Saudi companies or are in the process of entering the Saudi market.

AS: The Saudi Government has an ambitious plan to attract over US $ 900 billion foreign investment by 2020. The sectors identified as the most potential ones like Housing, Infrastructure, Electricity, Railways, to draw FDI are the sectors where India could emerge as a major player. What would be your advice to the Indian Inc. to explore and encash this opportunity keeping in mind the greater interest of Indo-Saudi bilateral relationship?

HE: Indian companies have responded very positively to the Kingdom's efforts to attract foreign investment. This is clearly evident from the fact that since the promulgation of new investment laws by the Saudi government in mid-2000, more than 58 licenses have been granted to Indian companies by the Saudi Arabian General Investment Authority (SAGIA) for establishing Joint ventures or 100% Indian owned companies. These JVs /100% foreign-owned companies are expected to bring around US $ 358.04 million worth of Indian investment in different sectors of Saudi economy such as petrochemicals, management and consultancy services, construction projects, telecommunications, information technology, pharmaceuticals, etc. Indeed, enormous potential exists for Indian companies for participating in the infrastructural sectors of Saudi Arabia such as oil and gas, electricity, railways, water, housing and hospitals. As you would also be aware, Indian Oil Corporation and ONGC Videsh Ltd. have shown interest in participating in the gas projects in Saudi Arabia pursuant to invitations extended by the Kingdom.

Our advice to the Indian companies has been to take a long-term perspective on Saudi Arabia. The Indian companies should explore business opportunities in Saudi Arabia more intensively by regular visits to the country by their chief/senior executives and managers as well as by stationing their representatives in Saudi Arabia. They should establish strong relationships and contacts with local companies which would enable them to make use of business opportunities as and when they arise in future. By setting up regional offices and presence in Saudi Arabia, the Indian companies would gain required knowledge of the local conditions and reforms being implemented, which in turn would enable them to respond adequately to the emerging opportunities.

AS: India today ranks sixth among top ten foreign investors in Saudi Arabia. This reflects India's undisputed credibility in the eyes of the Saudi Government. What, according to you, is the prospect of India's coming up the ladder to establish its role as a more investor-friendly nation in the Kingdom?

HE: India, during last two years, has emerged as one of the leading foreign investors in Saudi Arabia and the number of licenses awarded to the Indian companies by the Saudi Arabian General Investment Authority (SAGIA) since its inception has been impressive. The sincerity of the Indian investors has been recognised and appreciated by the Kingdom. This is clearly evident from the growing number of Saudi businessmen who are visiting India to source their business needs and look for business partners. As you would be aware, a high-level Saudi Ministerial delegation visited India in April/May 2003. Another high level business delegation organised by the Council of Saudi Chambers of Commerce and Industry is scheduled to visit India during October 2003. Similarly, Indian delegations which regularly visit the Kingdom have also experienced an upsurge of interest among the Saudi businessmen to do business with India. Both India and Saudi Arabia are looking towards each other as reliable business partners and attractive investment destinations.

AS: One of the major issues that is being talked about is the lower limit of FDI set by the Saudi Government. Do you think that such a policy may come in the way of those aspiring Indian companies who are technologically advanced and technically experienced but may not be able to comply with the Saudi FDI formula? What is India's stand on this issues?

HE: The growing number of investment ventures, including in the Small and Medium Enterprises (SMEs) sector, clearly indicate that businessmen on both sides do not feel any such constraints. With the increasingly growing awareness about the Saudi market and the substantial quantum of its untapped potential, the number of technologically competent and experienced Indian companies doing business with the Kingdom is growing steadily. A large number of Indian businessmen are visiting the Kingdom on their own or as part of business delegations or for participating in trade fairs/exhibitions. So we feel that increasing the awareness about each other and appreciation of each other's complementary strengths is the key to further increasing the level of bilateral economic and commercial exchanges.

AS: Saudi Arabia has set in the process of economic reforms, going in for more and more private sector participation. On the other hand India is in the second phase of economic reforms launched in early 90s. Do you find any commonality in the reforms policies of these two countries? In the backdrop of you rich experience as India's country head in Saudi Arabia, what are the areas you feel should also be brought under the economic reforms process in the Kingdom?

HE: Both India and Saudi Arabia are committed to reforming and liberalizing their economies to provide higher levels of living standards to their citizens by supporting and promoting private enterprise and innovation. Both of them have taken major and effective steps to make real progress in direction of these objectives. It is heartening to note that in Saudi Arabia, rules, regulations and procedures are being continually simplified and streamlined to facilitate business. Any observer of the economic landscape in Saudi Arabia will vouch for the salutary effects of the liberalization drive launched by the Kingdom, which has made appreciable changes in all areas. India, which has successfully implemented a major economic reform programme with far-reaching positive result, wishes full success to important efforts and initiatives underway in the Kingdom.

AS: Lastly, what are the sectors, according to you, where the Kingdom can help India strengthen its economy and industry?

HE: India and Saudi Arabia share a large number of areas where they can benefit from their complementary strengths. For example, the Kingdom has substantial sources and expertise in petroleum and petrochemicals industry. Saudi companies can reap considerable benefits by making investments in India. On its part, India has many strengths that have attracted foreign investors to its shores – our stable polity and democratic framework; well-developed legal system and independent judiciary to safeguard the 'rule of law'; a free press; a rapidly growing economy with a huge market; and a strong tradition of entrepreneurship. Businessmen in Saudi Arabia are becoming increasingly aware of the rich opportunities for investment in India, where their capital, coupled with locally available state-of-the-art technologies, unmatched human resources/expertise, large and expanding market, skilled labour, etc., can bring in rich rewards.

Needless to say that relations between the two countries are passing through a very exciting phase and the future of these relations is very bright indeed.

September 23, 2003

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