Monograph Indias Growing Role in The Gulf PDF

Indias Growing Role in the Gulf
Implications for the Region

and the United States
Indias Growing Role in the Gulf

Implications for the Region
and the United States
Gulf Research Center

Dubai, United Arab Emirates
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The Nixon Center

Washington, DC

187 Oud Metha Tower, 11th Floor,
303 Sheikh Rashid Road,
P. O. Box 80758,
Dubai, United Arab Emirates.
Tel.: +971 4 324 7770
Fax: +971 3 324 7771
E-mail: info@grc.ae
Website: www.grc.ae
First published
Dubai, United Arab Emirates
Gulf Research Center 2009
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted in any form or by any means, electronic, mechanical,
photocopying, recording or otherwise, without the prior written permission of the
Gulf Research Center.
ISBN: 9948-432-36-3
The opinions expressed in this publication are those of the author(s) alone and do
not state or reflect the opinions or position of the Gulf Research Center or the
Nixon Center.
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By publishing this volume, the Gulf Research

Center (GRC) seeks to contribute to the
enrichment of the readers knowledge out of
the Centers strong conviction that knowledge
is for all.
Abdulaziz O. Sager
Chairman
About the

The Gulf Research Center (GRC) is an
independent research institute located in Dubai,
United Arab Emirates (UAE). The GRC was
founded in July 2000 by Mr. Abdulaziz Sager,
a Saudi businessman, who realized, in a world
of rapid political, social and economic change,
the importance of pursuing politically neutral
and academically sound research about the
Gulf region and disseminating the knowledge
obtained as widely as possible. The Center is
a non-partisan think-tank, education service
provider and consultancy specializing in the
Gulf region. The GRC seeks to provide a better
understanding of the challenges and prospects
of the Gulf region.
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Contents
Contents................................................................................................................. 9
Introduction......................................................................................................... 11
Indias Economic and Political Presencein the Gulf: A Gulf Perspective............. 15
Samir Pradhan
Looking Beyond Tehran: Indias Rising Stakes in the Gulf.................................. 41

Harsh Pant
Indias Strategic Challenges in the Indian Ocean and the Gulf............................

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About the Contributors........................................................................................ 71
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About The Nixon Center...................................................................................... 75
Introduction
The major countries of Asia are looming as important regional players in the
Middle East. A primary reason for the growing Asian footprint is economics, but
it is more than simply the need for petroleum and natural gas that draws in the
Asian states. They are attracted by opportunities for consumer sales and, in the case
of South Asia, the export of millions of laborers to build the emerging city-states of
the Arabian Peninsula. Thus, the paradox is that despite the threat of new conflicts,
billions of dollars have been invested in the region and vast wealth accumulated and
spent only a few hundred miles from ongoing military conflict.
The financial crisis, which began in earnest in September 2008, has raised
the prospects for a prolonged global recession, which will have a negative impact
in most economic activities, including the value of energy exports, investments,
tourism and consumer sales. Nevertheless, many observers believe that, in the long
run, the global economy will recover and the economic trend lines that were in effect
before September 2008, which showed growing economic activity between Asia
and the Middle East, will be resumed. A number of traumatic events could upset
this assumption including a new major Middle East war, severe social and political
chaos in the region, Asia or even Europe and the US, or a total re-evaluation of the
models of economic growth that are predicated on transparency, open markets and
relatively free trade.
The depth of Asias involvement in the Middle East can be measured in a
number of ways, including the projected increase in the amounts of energy flowing
east to Asian markets over the coming decades, the value of Asian exports to the
Middle East, financial investment by Asian and Middle East countries in each
others development, including construction and infrastructure, the number of
tourists in both directions and the number of Middle Easterners enrolling for
11
Indias Growing Role in the Gulf: Implications for the Region and the United States
higher education in key Asian countries.

Perhaps the most visible element of the growing Asian-Middle East partnership
concerns expatriate workers in the GCC countries. Over 4 million Indians are to be
found at every level of occupation on the Arabian Peninsula. In addition to Indian
workers, millions of others come from South Asian countries. Without Asian labor,
the oil rich economies of the Gulf would be in deep trouble, and without the allpowerful military presence of the US in the Gulf, they would be easy prey to regional
predators, of whom Saddam Hussein was the classic example.
It is the emergence of China and India as regional superpowers with
an increasingly global outreach that has had the greatest impact on the region.
In different ways, India and China will pose challenges and opportunities for the
current regional hegemon, the United States. Questions about energy access, the
security of the Arab Gulf, military cooperation, arms sales, oil and gas pipelines and
energy security all need to be considered. These issues must be analyzed against the
historical background of past Indian and Chinese influence in the region. Indias
direct involvement in the Middle East, especially in the Gulf, is more extensive than
Chinas, due to proximity. But for the future, as China expands its geo-economic
reach westward into Central Asia and Pakistan with new infrastructure projects, as
well as increasing trade relations, it too will become a more important player.
India and China have achieved a remarkable diplomatic presence in the
Middle East, and unlike the United States or the former colonial powers (Britain,
France, and Italy), they have made very few enemies and have managed to build
good working relationships with all countries including close ties with Israel. Both
countries are engaged in Mid-East peacekeeping operations. Chinas participation
in Lebanon within the framework of the United Nations Interim Force in Lebanon
(UNIFIL) began officially on April 9, 2006. India has a much longer record of
post World War II Mid-East peacekeeping, beginning with its participation in the
United Nations Emergency Force (UNEF) established in 1956 to monitor the Sinai
desert. India has peacekeeping forces in UNIFIL, numbering 672 troops and staff
officers and provided two of the last four commanding officers, but has not added
any forces recently. Although India has historically had a more visible presence in
the Gulf than China, it is only recently that is has begun to demonstrate power and
influence. India has so far not had a major arms supply relationship with the Middle
East countries, except Israel, but has been cooperating on a military-to-military
basis with all of the small countries in the Gulf in recent years.
To explore the Indian perspective in more depth, the Gulf Research Center
(GRC) and The Nixon Center co-hosted a workshop at the GRCs headquarters
12
Introduction
in Dubai in November 2008 on Indias Growing Role in the Gulf. Three papers
by Indian scholars were prepared for the meeting, which are published in this
monograph. The Nixon Centers participation was made possible by a generous
grant from the Carnegie Corporation of New York.We intend to organize a second
workshop in 2009 on Chinas Role in the Middle East.
Abdulaziz Sager
Founder and Chairman
Gulf Research Center, Dubai
Geoffrey Kemp
Director, Regional Strategic Studies

The Nixon Center, Washington DC
13
Indias Economic and Political Presence

in the Gulf: A Gulf Perspective
Samir Pradhan
Abstract
Indian presence in the Gulf region is civilizational, which has developed into a
vibrant relationship over the years, primarily based on a complementary abundance
of entrepreneurial skill and wealth. With the emergence of India as a large economic
power in recent years and simultaneously the Gulf region witnessing spectacular
economic growth, economic trends are reinforcing mutual interdependence. While
Indias economic presence in the region has transformed from barter exchanges
between merchants and Indian human capital foiling the Gulf s oil-industrial
development, Indias political presence has remained more or less subdued.
However, in the changing post-Cold War geopolitical environment and converging
security landscape spanning Afghanistan to the Arabian Gulf, India has become
strategically important for the Gulf countries as a major geopolitical player. This
paper analyzes Indian presence in the Gulf region and makes an assessment of the
emerging Gulf-India ties from the Gulf regional perspective.
Introduction
For centuries, the Gulf region1 occupied a strategic position on the sea routes
between the Fertile Crescent2 and India, a center for the international pearl trade,
and at various times, a crossroads for regional trade between the Crescent and the
15
old Silk Route. Indian presence in the Gulf region predates that period as far as
the third millennium B.C., when trade and travel flourished between the erstwhile
Indian kingdoms and the Arab world. Archaeological evidence about the great
Indus Valley civilization period confirms this movement of peoples between the
regions. The historical legacies of international trade between the two regions points
to barter exchanges of textiles and spices in lieu of dates, pearls and semi-precious
stones. More importantly, during this period, the Indian business community,
especially wealthy individual merchants, set up their base in the region.
The major economic thrust came after the discovery of oil in the region and
the subsequent economic development of the desert economies propelling imports
of goods, services and manpower from the neighboring Asian region. As large
numbers of people from India migrated to the Gulf in their quest for wealth and
prosperity, so did the business communities in their effort to serve these expatriate
consumers as well as the wealthy import dependent Arabs.
The succeeding periods witnessed phenomenal migration of labor from India as
the oil-fueled development process in the Gulf gathered momentum. Simultaneously,
individual business houses from the subcontinent started to expand their base through
partnership with Gulf business communities. And the legacy continued, although
the pattern of economic engagement has transformed considerably over the years. In
essence, the Indian community has played a pivotal role in the transformation of the
Gulf economic scenario from primeval commercial exchanges to high-tech based
corporate practices and innovative consumer services.
The changed economic and geopolitical environment in the aftermath of 9/11
and the constrained business environment for the Gulf countries in the Western
world intensified the Gulf s economic engagement with Asia in general and India
in particular. Asias emergence as a global economic power and Indias increasing
global economic clout also considerably changed the business patterns of the Gulf
countries. While the Gulf s economic engagement with India has grown to the
current stage of intensive interaction, Indias political presence in the Gulf remains
subdued. This has been primarily due to mutual negligence, domestic constraints,
international power relations and inward looking policies of past eras. However,
with a changed global geopolitical environment and increasing geoeconomic
interdependence, the Gulf region considers India not only a strategic economic ally,
but also a potential bridging power that can play a constructive role for regional
peace and stability.
This paper explores Indias economic and political presence in the Gulf region
and analyzes trajectories of Indo-Gulf relations from ancient times, through the
16
Indias Economic and Political Presence in the Gulf: A Gulf Perspective
pre-oil era, to the present days burgeoning ties. Highlighting Indias invaluable
contribution to the overall transformation of Gulf desert markets into contemporary
and rapidly industrializing economic zones, this paper will attempt to provide further
research about a dimension of the Mid-East-Asian relations hitherto untouched by
scholars. This in no way belittles the sincere acknowledgement by Gulf States about
Indias significant contribution to the regions economic development; rather possibly,
it could provide a knowledge platform to further boost the Gulf s civilizational ties
with India. The remaining part of the paper will consist of three broad sections:
Section 1 gives a brief historical account of Gulf s embryonic ties with India,
primarily facilitated through commercial exchanges and the settlement of Indian
business communities. Section 2 deals with Indias economic presence in the Gulf
region through three dimensions labor, commercial and business establishments,
and growing trade and investment linkages. Section 3 analyzes Indias political
presence in the Gulf region from the perspective of changing international relations
and the Gulf regions view about India as a potential global power.
Gulf and India: The Early Globalizers

Authoritative research shows Gulf Arabs and Indians were early globalizers,
both complementing each other with wealth and skills, and in the process creating
the embryo of a globalized world market (Chanda 2007). Gulf-India trading
connections which began over 3,000 years ago have since blossomed into a global
network with India at its hub. Arab navigation and trading enterprises opened India
to the wider world, and the Arab quest for knowledge in early Islam helped transfer
Indian learning to Europe and vice versa. Arab traders in search of exotic food,
cloth and luxury items ventured out by boat and camel caravans, thereby developing
barter trade. Ptolemy Philadelphus, (285-246 B.C.) the king of Egypt who had sent
an envoy to the Mauryan court showed off his Indian connections by displaying
Indian women, Indian hunting dogs, cows, Indian spices carried on camels and
many other strange objects in the royal possession (Chanda 2008). In the same
period, adventurous Indian traders sailed up to the island of Socotra (based on the
Indian name Sukhtara meaning Happy Star) off the coast of Yemen. The soldiers
of Alexander the Great were surprised to find a colony of Indian traders on the
island named as farj al-Hind or frontier of India.
Recent archaeological discoveries in the ancient Red sea port of Berenike
provide evidence of Indian presence in the Egyptian part of the Roman Empire.
This early civilizational trading links emerged primarily due to the development
17
of monsoon driven sea trade. The Roman historian Strabo has documented that
merchant ships from Egypt carrying tin, lead, wine, coral, glass, gold and silver
coins used to ferry their cargo almost everyday to India - a route that was possible
due to seasonal monsoons.
By the 10th and 11th century, Arab traders and Indian artisans had set up a
rudimentary production supply chain involving ivory. Arab traders along the
African coast exported large quantities of elephant tusks to India, where artisans
carved them into jewelry, ornaments and religious icons for export to China and
the Mediterranean. It is argued that the most lucrative item in Indo-Arab trade was
the horse, which was in great demand in India by Gulf Kingdoms seeking to build
a cavalry. It was reported that each Arabian or Central Asian horse was sold for 220
dinars of red gold during the 13th and 14th centuries. Moreover, during this period,
more than 10,000 horses were exported to India annually from ports and trading
centers in and around the Gulf alone (Chanda 2008). There was also a famous cloth
fair near Mecca that used to be the hub for Indian textile industry to market their
products with European merchants with Arab traders mediating.
With the increasing trade volume and the need to wait for several months till
the arrival of the monsoon, Arab traders started to settle on Indias Malabar Coast
in places such as Calicut, Cranganore and Quilon. The local population provided
them with warm hospitality, treating the Arab traders as harbingers of prosperity,
and calling them Mapilla or sons-in-law. The succeeding period witnessed
migration and inter-marriage with locals and a growing influence of Islam. These
interconnections deepened with the Arab conquest of the Sind which opened the
door for even more intense exchanges between Gulf and India. Over this long stretch
of history, many Indians visited and settled in the Gulf and the West Asia region.
This process continued until the presence of the British colonial administration
saw increasing trade and manpower exchanges between Gulf and India and finally
culminated with a mass migration of Indians to the Gulf in search of fortune and
Gulf Arabs flying to India for medical care as well as leisure purposes3. This created
a new chapter in the Gulf-India millennial relations.
Economic Presence
Gulf s Oil Development and Indias Manpower Bonanza
The discovery of oil and manpower shortages in the Gulf precipitated

phenomenal labor migration to the region. Given the population pressure and
bleak economic prospects at home, Indian laborers flocked to the Gulf in search of
18
employment and higher wages. The presence of Indian laborers dates to 1935 when
BAPCO imported labor from India. The labor roster for October 1935 included
some 45 skilled and semi-skilled Indian employees (Secombe 1982). Labor
demand in Bahrain, Kuwait and Qatar grew rapidly and the call for Indian labor
supply increased thereafter. Meanwhile, the provisions of the Indian Emigration
Act made the export of unskilled Indian workers illegal. As documented, BAPCO
was even prepared to take on the responsibility of and pay guarantees for illegal
immigrants from India. In July 1936, BAPCO opened a recruitment office in
Bombay to adopt indirect recruitment policies BAPCO invited emigrant
employees from India who defrayed their own expenses to Bahrain and employed
them there.
By October 1937, 236 skilled/semi-skilled Indians were employed in BAPCO
and the number of accompanying dependants had also grown significantly. It has
been argued that the British were instrumental in promoting the employment of
Indians in order to suppress the Persian claim of sovereignty over Bahrain (Secombe
1982). Simultaneously, there was increasing demand for Indian products as reflected
in the survey conducted by Weightman, the then political agent in Bahrain. There
were nearly 215 shops in Manama Bazar occupied by Indian traders. By 1941,
the community was large enough for the British to consider the establishment of
an Indian school for the education of children of Indians employed in Bahrain.
The situation was the same in other Gulf countries where the number of Indian
laborers was increasing day by day. In 1938, Thornberg, the Vice-President of
California Arabian Standard Oil Company (SOCAL), traveled to Bombay with
the intention of recruiting Indians of a better type for employment both in Bahrain
and Hasa in skilled work which, so far, is beyond the capacity of the local Arabs.
'Indians' dominated the monthly paid (largely skilled and semi-skilled) labor force
in Bahrain, Qatar and Saudi Arabia. In fact, Ibn Saud insisted on equal payment for
Indians and Arabs employed in Dhahran by Aramco.
In 1936, large numbers of Indian traders were present in Kuwait and the Shaikh
of Kuwait even expressed the desire to keep them out because of the apprehension
that Indians are able and capable of living more cheaply than his own people
and their business acumen may drive many Kuwaiti merchants out of business.
Consequently, they proposed to limit the number of Indians entering Kuwait and
decreed that no Indian could carry on business without an equal Kuwaiti partner.
However, such steps were soon overlooked when the Kuwait Oil Company (KOC)
increased its employees from 1,900 in January 1947 to 18,000 by January 1949,
of whom 4,053 were Indians. The majority of Indian workers (3,269) were skilled
19
and semi-skilled, paid at rates of Rs. 190 per month plus a further Rs. 95 as living
allowances. In Bahrain, Indian and Pakistani labor remained the largest component
of the expatriate labor force over 60 per cent in 1977. In Kuwait, Indian and
Pakistani labor represented only 10.4 per cent of immigrant workers in 1975.
Thus, the predominance of employees from the Indian sub-continent in skilled
and unskilled occupations from the 1930s and their prominent role as unskilled
workers filled the vacuum in supply left by shortages of local Gulf labor. As the
oil-led development process gathered momentum into the modern era, the flow
of Indian laborers increased. Simultaneously, Indian business establishments also
increased in the Gulf region.
Currently, around 4.5 million Indians live in the GCC, making them the
largest expatriate community in the region (Figure 1). The majority of the Indian
population in the GCC is from the Southern Indian States, including Andhra
Pradesh, Tamil Nadu and Kerala. The rest belong to Gujarat, Maharashtra, Goa,
Punjab, Uttar Pradesh, Bihar and Rajasthan. The original settlers were mostly
Sindhis and have been the integral part of the business community in the Gulf
(especially the UAE). The Indian expatriate community can be categorized into
four broad groups, viz., (a) unskilled workers, employed in construction companies,
municipalities, agricultural farms and as domestic workers; (b) skilled and semiskilled workers; (c) professionals, such as doctors, engineers, accountants, employed
in government and private sectors; and (d) businessmen.
Figure 1: Indian Expatriates in the GCC, 2008 (number in million)

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Source: Indian Embassies in the GCC, 2008.
Around 1.5 million Indians live in the UAE, about a million of whom live in
Dubai and the Northern Emirates and the remainder of about 0.5 million in the
Emirate of Abu Dhabi. It is estimated that about 33 percent of the total population
20
and over 42.5 percent of the work force in the UAE are Indians. Indians have been
playing a major role in the economic development of the UAE over the last 35
years. Professionals and technically qualified Indians are engaged in huge numbers
in the knowledge-based economic sectors such as information technology, Dubai
Internet City, Dubai Media City, free zones, etc.
Table 1: Unskilled Indian Emigrants to the Gulf and World
Country
2003
2004
2005
2006
2007
United Arab Emirates
143,804
175,262
194,412
254,774
312,695
Qatar
14,251
16,325
50,222
76,324
88,483
Saudi Arabia
Oman
Kuwait
Bahrain
GCC
Rest of the World
121,431
36,816
54,434
24,778
395,514
466,456
123,522
33,275
52,064
22,980
423,428
474,960
99,879
40,931
39,124
30,060
454,628
548,853
134,059
67,992
47,449
37,688
618,286
676,912
195,437
95,462
48,467
29,966
770,510
809,453
Note: Figures only include Indians who have not completed school education and who obtained
clearance from the Protector of Emigrants in India. Educated persons, those who travel on visit visas
to seek employment etc. are not included in these figures.
Source: Rajamony, June 2008
The Indian business community is primarily engaged in trading, although there

is now growing diversification into manufacturing, especially in the numerous Free
Zones in UAE, in particular the Jebel Ali Free Zone ( JAFZ), which has attracted
a number of companies from India. Registered community associations provide a
platform for interaction between visiting Indian dignitaries and influential locals.
The Indian Business/Professional Group, Abu Dhabi, Overseas Indian Economic
Forum, Dubai, Indian Business Council, Dubai and Indian Sports Clubs are active
in organizing such interaction and facilitating visits of Indian leaders/delegations
(Indian Embassy 2008).
In Saudi Arabia, the Indian community is the largest expatriate community
and accounts for 1.4 million people (or 20 percent) of the total 7 million expatriates.
Most of these Indians are either semi-skilled or unskilled workers. From the point of
view of their employment and social status, Indian expatriates in Saudi Arabia can
be divided into three categories: (i) professionally qualified (5 percent) - i.e. doctors,
engineers, chartered accountants, managers etc., who are employed both with the
21
government and private sectors on the basis of a specific time bound contracts; (ii)
white collar staff (10 percent) i.e. clerks, accountants, store keepers, booking clerks,
secretaries etc.; (iii) laborers/technicians (85 percent) working on project sites,
industrial establishments and on operation and maintenance jobs. According to
rough estimates, most of the Indian expatriates in Saudi Arabia are from Kerala
(40-50 percent), Tamil Nadu (20 percent), Andhra Pradesh (20 percent) while the
remainder are from other states (Indian Consulate Jeddah 2008).
Nearly 200,000 Indians live in Qatar, with professionals constituting a small
but important component of the Indian expatriate community. The Institution of
Engineers, Indian Medical Association and the Institution of Chartered Accountants
maintain active chapters in Qatar, with an expanding membership and ongoing
activities. In addition, there are a number of specialists working in other fields such
as management, education, pharmacies, and computers (Indian Embassy 2008).
There are around 600,000 Indians in Oman, constituting the largest expatriate
community in the country. Coming from all parts of India, they include skilled
workers and technicians, and professionals such as doctors, engineers, bankers,
finance experts, and managers, with many holding middle and senior management
positions in the corporate sector. Several Indians also hold major positions in Omani
government departments and public undertakings: there are around 2,000 Indian
doctors working in the country. The contribution of Indians to the development of
Oman, particularly in the fields of commerce, healthcare, education, horticulture,
finance, construction and communication is widely acknowledged. A number of
persons of Indian origin have been granted Omani nationality, and some of them
have received high awards from the Omani government (Indian Embassy 2008).
As on July 1, 2008, data from the Kuwaiti Ministry of Interior shows that there
are 600,000 Indians constituting the largest expatriate community in Kuwait. Of
late, there has been an increase in the number of highly qualified experts in hi-tech
areas, especially in the software and financial sectors. In the field of health, India not
only supplies top specialists but also para-medical staff. Indian expatriates include
professionals like engineers, doctors, chartered accountants, scientists, software
experts, management consultants, architects, skilled workers like technicians and
nurses, semi-skilled workers, retail traders and businessmen. A large proportion of
the Indian expatriates are also unskilled and semi-skilled workers.
In Bahrain, Indians numbering 300,000 constitute the largest expatriate
community. Nearly 65-70 percent of the Indian expatriate workforce is employed
in the construction, contracting and maintenance sectors. There are a relatively
small number of Indian housemaids estimated at around 12,000-15,000. The
22
retail and other business activities include groceries, hardware, jewelry and
electronics. Other Indian expatriates have taken up jobs as storekeepers, chemists,
carpenters, barbers, etc. In addition to the predominant blue-collar labor force,
there are a sizable number of doctors, engineers, chartered accountants, bankers,
managers and other professionals who play a vital role in Bahrains socio-economic
development.
Unlike in the 1970s and 1980s, when nearly 90 percent of Indians in the Gulf
were blue-collar workers, today over 35 percent of the Indian expatriate workforce
are white-collar professionals specializing in fast moving fields such as the service
industry. Unlike in other regions, Indian expatriates in the Gulf have a higher
propensity to remit back the money they earn. Since more than 65 percent are lowskilled laborers, their families back home depend solely on these remittances as a
source of living.
With the change in legal procedures regarding owning property in the UAE,
expatriates, especially the skilled workforce, are also increasingly investing in UAEs
booming real estate sector. According to the latest data, the Gulf countries together
account for nearly 27 percent of total remittances flowing to India (see Figure 2).
Remittances from the Gulf are typically linked to the fluctuations in exchange rate
between the rupee and the dollar as all Gulf currencies, except the Kuwaiti Dinar,
are pegged to the dollar. A sharp decline in the value of the Indian rupee against the
dollar and GCC currencies triggered a sudden jump of 40 per cent in the volume of
remittances from the Gulf in May 2008.
Figure 2: Source Regions of Remittances Flows to India, 2006-07
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Source: Reserve Bank of India, 2007

23
As the value of the rupee dropped from Rs39.25 to Rs43.15 per dollar, and
consequently against all GCC currencies which are pegged to the dollar, there has
been a dramatic surge in the volume of transactions from the Gulf. From an estimated
average monthly money transfer of Rs120 billion from the GCC countries, the
volume of transactions from the region shot up by 40 per cent to Rs165 billion.
Remittances from the UAE account for 30 per cent, second to Saudi Arabia which
accounts for almost 40 per cent of remittances to India from the region.
Indian Business Community and Companies in the Gulf
There are several success stories relating to the tremendous efforts made by
Indian business communities in transforming the business sector in the Gulf region.
Good dividends, secure markets and close political relations are the driving forces
behind the expansion of Indian business activities in the Gulf region. Indian business
community pioneers like Manu Chhabria of the Jumbo group, Taizoon Khorakiwala
of the Switz group, the Jashanmals, the Emke Group, the Khimji Group of Oman
and numerous others have not only revolutionized the business scenario ranging
from retail households to high-end electronic goods in the Gulf region, but also
have successfully expanded their businesses on a global scale. For these business
leaders, the fundamental strategy was to cash in on the booming consumer base that
aspired towards the comforts of middle and high-class lifestyles, by leveraging major
competitive advantages such as low labor costs, resource prices and strategic geographic
location. Today there is hardly any established Bahraini business organization that
does not have a senior or middle level Indian employee playing an important role in
its operations. The top Bahraini businesses such as Al Zayani, Al Moayyad, Fakhro,
Kanoo, Koohejis, Ahmed Mansour Al Ali, Abdullah Nass, Mohammed Jalal as well
as companies like Bahrain Aluminum, BAPCO, GPIC, banks and finance companies
have Indians in their senior or middle management cadre.
Recent years have seen a consolidation and expansion of business-to-business
contacts in both the regions. As the Gulf countries have diversified into industrial
and commercial activities, Indian expatriates have turned into entrepreneurs,
investing in retail stores, gold and textile trade, hotels and restaurants, IT companies
and joint ventures. According to the Saudi Arabia General Investment Authority
(SAGIA), more than 190 Indian companies received licenses from the Saudi
Arabian Investment Authority over the past two years to set up either fully-owned
or joint-venture projects with Saudis, pumping more than SR4 billion into the
Saudi economy. Almost every major Indian corporation has a presence in the UAE
by way of actual investments, trade or representative office. It is estimated that more
24
than 3,300 Indian companies have set up manufacturing units or opened local
offices in the UAE. More than 600 of them are located in the Jebel Ali Free Zone
whereas others are in the Free Trade Zones in Sharjah, Ajman, Ras Al Khaimah
and Fujairah. Major groups with investments in the UAE include Mahindra
Group, Ashok Leyland and Mumbai-based property developer Dheeraj Group.
Indian companies are the mainstay of the free zones and more of them are looking
at service industries as well, such as medical and educational fields. Some Indian
educational institutions are opening full-fledged campuses in medical, engineering
and management education. In Sharjah, during the last seven years, about 500
Indian firms in diverse verticals have discovered the Hamriyah Free Zone (HFZ)
as an ideal place to expand their overseas operations. While labor costs in India are
lower than they are in the Northern Emirates, Indian companies and investors are
being lured in increasing numbers by the Northern Emirates advanced high-tech
infrastructure and a large pool of human capital.
Patterns of Trade and Investment Flows
Over the years, economic ties developed during the oil era have strengthened.
The GCC countries are important trading partners for India, and bilateral trade
has witnessed impressive growth in recent years. During the last five years, the
GCCs total non-oil merchandise trade with India has jumped from $7.8 billion in
2003 to $31.1 billion in the year 2007 (Figure 3). In 2007, UAE accounted for an
overwhelming 66 percent of the GCCs total trade with India, followed by Saudi
Arabia (16 percent), Qatar (8 percent), Kuwait (5 percent), Oman (3 percent) and
Bahrain (2 percent) (Figure 4).

&YQPSUT

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Figure 3: GCC-India non-Oil Trade, 1980-2007

5PUBM5SBEF
Source: Calculated from IMF DOTS Database, 2008.
25
Figure 4: GCC-India Trade, (Share and Value), 2007

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Rise in both exports to and imports from India have underlined the buoyancy
in the GCCs overall trade with India. The GCCs exports to India have risen
from $2.7 billion in the year 2003 to $11.3 billion in the year 2007, while imports
have risen from $5.2 billion in 2003 to $20 billion in 2007. The GCCs exports
to India witnessed a robust growth, with an annual average growth rate of 63
percent during the last five years. As a result, Indias share in the GCCs world
exports has increased from 1.4 percent in 2003 to 2.5 percent in 2007. Similarly,
the GCCs imports from India have registered an annual average growth of 56.5
percent in the last five years. Consequently, Indias share in the GCCs world
imports has increased from 5 percent in 2003 to 6.5 percent in the year 2007.
This shows the importance of India as a leading trading partner of the GCC
countries (Table 2).
:P:(SPXUI3BUFJO
Figure 5: Growth (Y-o-Y) of GCC Exports to and Imports from India

&YQPSUT
Source: Calculated from IMF DOTS Database, 2008.
26

*NQPSUT

Table 2: Indias Relevance as GCCs Trading Partner

Year
Export share
Import Share
Trade Share
1990
2.9
2.0
2.6
1980
2000
2001
2002
2003
2004
2005
2006
2007
0.7
1.8
2.2
1.2
1.4
2.4
2.1
2.2
2.5
1.5
0.9
4.1
2.5
3.9
2.8
4.3
2.3
5.0
2.7
6.3
3.9
6.3
3.6
6.6
3.8
6.5
4.1
Source: IMF DOTS, 2008
The GCC countries gained prominence in Indias foreign trade particularly

after Indias trade policy liberalization, which began in 1991. Trade policy reforms
have provided an export friendly environment conducive to accelerated free trade
with simplified regulatory procedures. In order to promote its trade interests, India
has granted Mutual Most Favored Nation (MFN) status to the Gulf countries. The
table below shows the GCCs top-10 export items to and import items from India
for the year 2007.
Table 3: GCCs Major Export and Import Items to and from India, 2007
Top 10 Export Items
Petroleum gases and other gaseous

hydrocarbons
Top 10 Import Items
Petroleum oils and oils obtained from

bituminous minerals, other than crude;
preparations not elsewhere specified or
included, containing by weight 70 % or more
of petroleum oils or of oils obtained from
bituminous minerals, these oils being the basic
constituents of the preparations; waste oils
Diamonds, whether or not worked, but not Articles of jewellery and parts thereof, of
mounted or set
precious metal or of metal clad with precious
metal
Gold (including gold plated with platinum), Diamonds, whether or not worked, but not
unwrought or in semi-manufactured forms, mounted or set
or in powder form
27
Ammonia, anhydrous or in aqueous
solution
Iron ores and concentrates, including
roasted iron pyrites
Mineral or chemical fertilizers, nitrogenous
Cyclic hydrocarbons
Ferrous waste and scrap; remelting scrap

ingots of iron or steel
Polymers of ethylene, in primary forms
Transmission apparatus for radio-telephony,

radio-telegraphy, radio-broadcasting or
television, whether or not incorporating
reception apparatus or sound recording or
reproducing apparatus; television cameras;
still image video cameras and other video
camera recorders; digital cameras
Rice
Special transactions & commodities not
classified according to kind
Refined copper and copper alloys, unwrought
Woven fabrics of synthetic filament yarn,
including woven fabrics obtained from
materials of heading
Copper wire
Imitation jewellery
Other tubes and pipes (for example, welded,

riveted or similarly closed), having circular
cross-sections, the external diameter of
which exceeds 406,4 mm, of iron or steel
Source: International Trade Center Database, 2008.
Recently, Indian and GCC companies are venturing into mergers and
acquisitions globally as well as bilaterally. India is credited to have 10 of the worlds
largest companies which are currently on a global acquisition spree in order to
leverage their strength and competitiveness. Similarly, GCC-based companies
are also venturing globally to acquire strategic stakes. In recent years, UAE-based
companies have acquired similar stakes in India. The GCC countries as a whole
represent a significant destination for Indias outward investment. For example,
from 2001-2005, India approved 133 joint ventures and 259 wholly owned
subsidiaries. The main sectors for investment in the GCC countries included
software development services, engineering services, tourism, readymade garments,
chemical products, agricultural and allied services. The GCC accounted for as much
as 42.5 percent of the total value of contracts secured by Indian project exporters
during the period 2000-01 to 2004-05 (Exim Bank 2006).
Until recently, India-GCC economic ties remained confined to oil, spices and
labor. As the trend shows, economic relations between India and GCC countries
which developed during the oil boom period remained limited in composition despite
growth in volume. Although the GCC countries transacted more extensively with
the Western market, the recent decline in oil revenue has forced these countries to
diversify their economies by developing the non-oil sector and building capacities
28
to process oil to realize higher value added to their products. Thus, India with a
market of 100 billion became extremely relevant for them. It is not merely energy
consumption, but the heavy demand for oil-based products like petrochemicals and
fertilizers that provided the basis for a more pronounced and beneficial economic
relationship between the two (Pant 1999). However, until today, the trade profile
is not diversified and remains heavily concentrated on the consumption patterns
and subsequent imports of goods catering to the 4.5 million Indian expatriates
living in the region (Karayil 2007). Empirical evidence (Pradhan 2007, 2008)
shows that India has huge export potential in the GCC countries except UAE and
Saudi Arabia. This is mainly due to the fact that both Saudi Arabia and the UAE
are Indias largest trading partners in the GCC, so unless Indias export profile to
these countries is diversified, the existing potentials cannot be exploited. Therefore,
initiation of Free Trade Agreement (FTA) negotiations is the best way to enhance
bilateral trade between India and the GCC.
Apart from merchandise trade, energy trade between India and the GCC
constitutes another pivotal aspect of their economic relations. The GCC is the
traditional supplier of oil and oil-products to India due to their geographical
proximity and absence of any other oil and gas exporting region in Indias vicinity.
Since the oil crisis of 1970s, Indias dependence on oil and oil-product imports from
the GCC has substantially increased, owing to the burgeoning demand for oil and
gas to fuel its rapidly industrializing economy. Besides the continuing cooperation
in the energy sector, the GCC countries supply nearly 65 percent of Indias crude
oil needs. In 2007, India imported nearly 52.8 million tons of crude oil from the
GCC region, and Qatar exported natural gas for the first time in 2002 to India.
Importantly, with the spectacular growth of the refining industry and subsequent
increase in exports of petroleum products, Indias exports of petroleum products to
the GCC are on the rise. In 2005-06, Indias exports of petroleum products to the
GCC were worth approximately $11 billion. In fact, the energy sectors of India
and the GCC complement each other. As the GCC loses considerable leverage in
Western export markets for its oil, India is becoming a crucial export destination for
the GCC, and likewise, the GCC markets are becoming crucial for Indias exports
of oil products.
Thus, recent trends depict the emergence of vibrant trading relationships
between India and the GCC which has multidimensional implications for regional
economic engagement in Asia. Against the backdrop of these vibrant trading
relationships, one could foresee a scenario of broader economic integration centering
on the more pervasive emerging energy paradigm. As rightly observed, Both sides
29
have recognized that oil has and will continue to be the mainstay of India-GCC
economic cooperation, there has been an increased recognition of the fact that,
while India needs to secure its energy needs through increased Gulf cooperation,
both sides cannot afford to overlook the opportunities emerging in other sectors.4
Recent Policy Framework, Major Concerns and Outlook
India and the GCC share a strong and rapidly growing economic relationship.
Further strengthening and deepening of this relationship is a major priority for
both, with governments committed to sustaining the impressive trade and economic
performance achieved in recent years. The signing of the Framework Agreement
of Economic Cooperation between India and the Member States of the GCC in
New Delhi on August 25, 2004 and the subsequent first round of negotiations
on March 21-22, 2006 was a re-affirmation of this commitment. The Framework
is a broad-based and forward-looking document, that has set a clear agenda for
the bilateral trade and economic relationship over the coming years. It covers a
wide range of activities aimed at improving commercial and policy linkages and
delivering improvements to the overall business environment to both countries
mutual benefit. As part of the Framework, India and GCC countries agreed to
undertake possible negotiation of a bilateral free trade agreement (FTA).
The Framework Agreement5 enhances the strength of these commercial
relationships. It reaffirms each countrys commitment to the ongoing development
of trade and investment, including within the context of the WTO, and strengthens
bilateral economic cooperation and dialogue. It provides that India and the GCC
will, through all-round economic and trade cooperation, achieve balanced and
comprehensive trade and investment facilitation and liberalization. The Framework
also provides for a wide range of specific steps to strengthen the trade and economic
relationship, including enhancing the exchange of information on foreign trade;
encouraging business communications, particularly between the institutions and
organizations concerned with foreign trade; giving attention to training and
technology transfer; appropriating arrangements for capital flows; setting up
joint investment projects and facilitating corporate investments; encouraging the
exchange of representatives, delegations and economic, commercial and technical
missions; organizing temporary exhibitions and providing necessary facilities and
assistance with a view to further economic cooperation; and forming the Joint
Committee for Economic Cooperation.
This Committee shall convene alternatively in the countries of the two
Parties on mutually agreed periodicity. Level of participation in the Committee
30
will be specified in advance. Functions of the Committee shall be following up

implementation of the provisions of this Agreement and other bilateral agreements
or protocols made between the two Parties based on this Agreement, handling any
difficulties or disputes that might arise from interpretation/implementation of the
provisions of this Agreement, adopting recommendations for enhancing economic,
commercial, technical and investment cooperation between the two contracting
parties, and fostering their economic relations and increasing the volume of trade
between them. The Joint Committee is authorized to set up any subcommittees
or specialized working teams at its discretion and when deemed necessary. The
Committee shall designate the duties and functions of such subcommittees and
working teams, provided that said subcommittees and working teams shall submit
their reports and recommendations to the Joint Committee.6
The three rounds of joint FTA negotiations inject a new dynamism into the
liberalization of trade in goods between India and the GCC. In committing to these
negotiations, India and the GCC recognize that multilateral trade negotiations are
the most effective mechanism to achieve trade liberalization and thereby to promote
national and regional economic development. Each country also recognizes,
however, through their existing bilateral free trade negotiations with other selected
trading partners, the potential for WTO-consistent free trade agreements to deliver
benefits at a more rapid pace. Such agreements can, in turn, support and reinforce
multilateral liberalization in the WTO. Furthermore, both recognize that free trade
agreement negotiations, involving products across all sectors, serve more broadly as
instruments for demonstrating closer diplomatic relations also enhancing mutual
interests. The implications of a possible FTA between India and the GCC need to
be considered in this broader context, as well as in terms of its direct effects on trade
in goods and bilateral investment flows. However, of late, no actual progress in the
FTA has been achieved due to serious concerns by various stakeholders of both
the regions regarding some of the provisions. The major concerns obstructing the
FTA negotiations include the divergent rules, procedures and standards followed
by GCC member countries, the stalled unification of the GCC as a true customs
union, the demand for including oil imports in the agreement by which the Indian
government stands to lose revenues from import duties, apprehensions from the
Indian petrochemical sector, and bureaucratic inertia.
Nevertheless, there are outstanding opportunities for expanding the GCCs
relations with India. While Indians are one of the main agents of the GCCs economic
progress, Indias growing economy and a market of billions would provide immense
potential for the GCC countries to further their global economic presence. Thus
31
growing economic relations between the GCC and India will no doubt have spillovers
in the political and security arenas in the changed global environment. Before looking
at this dimension, let us analyze Indias political presence in the region.
Political Presence
New International Order and Emerging Neo-Economic Powers
By all accounts, the world is moving rapidly towards multipolarity. The postCold War era geopolitical, geo-economic and geo-strategic imperatives underwent
substantial changes in the aftermath of 9/11 and the 2003 forced regime change in
Iraq. Simultaneously, the growth of emerging economic powers also considerably
influenced the process. What one sees now is a hexagonal power polarity with three
nodes; Russia, China, and India on the one side and the United States, Japan and
the European Union forming the other three points. Moreover, with increasing
global interdependence, it appears that the various nodes are striving for greater
accommodation of interests and better management of contradictions, despite
having divergent security and strategic cultures. With such changes in the global
power architecture, reverberations are strikingly evident in the power configurations
at the bilateral as well as regional level. Importantly, nation states are increasingly
managing their bilateral relations on the basis of a realpolitik assessment rather than
ideology alone. A case in point is the contemporary strategic environment in the
Gulf region, which is increasingly becoming unpredictable, having local, regional
and global implications. With windfall capital and vibrant economic growth,
the region is witnessing unprecedented transformation in the social, political,
economic, cultural and strategic realms. Importantly, certain favorable and adverse
domestic, regional and international factors pervasively influence their security
and strategic perceptions and increase their anxiety about the imminent future.
Coincidentally, being a neighbor and an emerging global power, India becomes
a reference point for the Gulf countries as a partner in their quest for managing
the evolving security equations. The change of perception in the Gulf region is
based on a new constellation in which India is increasingly viewed as a credible
non-partisan global player who can play a constructive role in managing conflicts
and restoring peace and tranquility in the region. Thanks to the Gulf s eastward
shifting economic engagements, burgeoning trade and investment linkages, and the
civilizational affinities between India and the Gulf region there is the promise of a
new era of deepening ties.
32
Gulf s Strategic Dilemma
The strategic importance of the Gulf region dates to the 19th century when three
great empires British India, Tsarist Russia and Ottoman Turkey confronted each
other for power projection. Since then, the region has a tradition of overwhelming
security dependence on external powers. With the discovery of oil, the Gulf region
became intrinsically enmeshed with the nuances of great power politics.
This process continued until the whole region came under pervasive control
of the security cordon provided by the US. Given the small population size of the
countries, the regional governments continued to rely upon outside powers to
maintain a crude balance of power in order to maintain sovereignty, domestic identity
and regime security. This balance of power was maintained with the direct and
extensive contributions from the external powers, either through providing military
technology and weapons (Russian sales of missile and arms to Iran) or deploying
military personnel in the region (US providing armaments and maintaining military
bases in some member countries of the GCC).
Today the strategic environment in the region is in a state of flux. This is due
to the crystallization of several conflicting factors. Irans increasing military posture
and Israels policy in the East Mediterranean region constitute the twin strategic
faultlines surrounding the Gulf region. The turmoil in Iraq, which used to be the
countervailing power to Iran, further adds to the security risks for the Gulf regimes.
Above all, the perception of an Israel-centric foreign policy by the United States
only increases tensions in the region.
It is noteworthy to point out the central role played by the United States as
the security lynchpin of the Gulf region (Koch 2008). The role and extent of US
involvement in the Gulf region has expanded tremendously since it filled the power
vacuum following the British withdrawal from the region in 1968. The overarching
presence of the US has considerably changed the regions strategic dynamics.
From the initial dual containment policy of orchestrating regional countervailing
powers against each other, the US has become in a sense the sole superpower in
the region as reflected in the forced regime change in Iraq in 2003. At present,
nearly 200,000 American troops are stationed in the Gulf region, the majority of
course in Iraq but with significant numbers in the GCC, thereby firmly entrenching
the US in the Gulf security scenario. Further, given the Gulf regions real security
concerns, the regimes cannot afford to suddenly change the status quo and seek an
alternate security arrangement. But while the US is an indispensable security ally
and would continue to play a formidable role in the Gulf regions emerging strategic
paradigm, it is increasingly apparent that such an exclusive role in its present scope
33
is neither sustainable nor unanimously acceptable to the Gulf regimes. In a sense,

the unilateral strategic dominance of the US in the Gulf region is coming to an end,
albeit slowly.
Thus, a clear strategic shift is in motion which is primarily due to the increasing
internationalization of the Gulf with other powers from Europe and Asia on the
fringe, but also due to a reorientation and self introspection by the Gulf countries
about their place in the international system and the role played by the US within that
system. Given the multidimensional security environment in the Gulf region from
the threat posed by Islamic radicalism and Iranian nuclear ambitions, to concerns
about the stalemate in Iraq, tensions surrounding the Israeli-Palestinian issue,
securing supply lines of oil exports and the role of Gulf finance in world economics
the regimes no longer feel safe in the comfort zone of the American security
umbrella. The ambiguity about the US role, either as a source of regional stability or
greater instability, entices the Gulf regimes to rethink their national interests amidst
volatile regional events. The region is in the throes of a transition which evolves
from patterns of interaction that are characterized by power politics and geopolitical
concerns to new ones that are marked by the politics of geoeconomics.
Adding to the complexity is the sheer pace of post modernism and its structural
spill over as reflected in domestic discontentment and the regions search of an
identity in the increasingly interdependent globalized world in which the parochial
projection of the Gulf (especially in the Western world) is not only hampering
their commercial pursuits, but also questioning the regions integrity. As a result,
there is a growing sense of confidence in the region that has led the GCC states to
play an increasing regional political and diplomatic role. Especially in the security
domain, the Gulf countries are increasingly re-shifting their strategies from bilateral
dependence to multilateral interdependence, sensing that bilateralism will no longer
meet the requirements of a multi-polar world in geo-economic terms. Furthermore,
the GCC leaderships are anticipating the shifting circumstances surrounding the
declining role of the US. Bahrains Minister of State for Foreign Affairs, Mohammad
Abdul Ghaffar, has, for example, called for a new security order in the Gulf with
the GCC states as the main pillar of defense while Qatars Amir Shaikh Hamad
bin Khalifa Al-Thani told the General Debate of the United National General
Assembly in September 2007 that: The major conflicts in the world have become
too big for one single power to handle them on its own (Koch 2008).
Nevertheless, it is certain that complete removal of external powers from the
region is not at all a possibility in the absence of a regional architecture and the
existence of glaring distrust among the states in the region (consider, for example,
34
the continuing problem of border disputes). Besides, given the global strategic
importance of the region, outside powers would not simply keep themselves away
from developments in the region as formidable stakes are involved. Thus, in the
current circumstances, a viable security framework is simply unthinkable at this
stage and it is certain that neither a regional solution nor an outside power can
counter the wide variety of threats to the region. Thus, the key before the Gulf
countries is to multilateralize the regional security space with the involvement of
other powers, especially an emerging global power like India with whom the future
stakes of the region are formidable. Therefore, India can become a natural security
ally for the Gulf.
Transforming Strategic Overlap into Partnership
The strategic horizon comprising the Gulf region and India shows the growing
interconnectedness in the security space extending from Afghanistan to the Middle
East. Indias location at the base of continental Asia and the top of the Indian
Ocean gives it a strategic location in Eurasia as well as among the littoral states of
the Indian Ocean from East Africa to Indonesia. India's peninsular projection in
the ocean gives it a stake in the security and stability of these waters which is crucial
for oil trade the lifeblood of Gulf economies.
While the overall strategic environment involving India and the Gulf region
is in a state of flux evincing uncertainties and dilemmas, there is no doubt that the
stakes are formidable. It may be noted that the connection between security and
stability in the two regions was first propounded in 1981 by the former Indian
Prime Minister, Mrs. Indira Gandhi and former UAE President Shaikh Zayed bin
Sultan Al-Nahyan. From a strategic point of view, the Gulf countries and India
share a desire for political stability and security in the region.The emerging common
security perceptions create further opportunities for Gulf-India cooperation in the
future. In the recent past, several Gulf countries, especially Bahrain, Oman, Qatar
and the UAE have concluded a number of bilateral strategic pacts with India.
The UAE and India entered into a strategic pact, signed on July 1, 2003 when a
high-level delegation led by the then Chief of Staff and now Abu Dhabi Crown
Prince and Deputy Supreme Commander of the UAE Armed Forces, Shaikh
Mohammed bin Zayed Al-Nahyan, visited India. That agreement envisages
cooperation in security, defense policy, development of defense cooperation,
training for the UAE military and military medical personnel, exchange of
cultural and sports activities between the friendly forces of the two countries
and joint efforts to tackle environmental issues, particularly pollution in the seas.
35
Saudi Arabia and India have entered into a similar pact. Such pacts confirm the
increasing recognition of India as an emerging power by the Gulf countries and
simultaneously the common strategic outlook of both. As aptly stated by the UAE
Foreign Minister, Shaikh Abdullah bin Zayed Al-Nahyan, at the opening of the
ministerial session of the Indo-UAE Joint Commission, At a regional level, we
also look forward to an increased involvement by India in issues affecting the Gulf
and neighboring countries and that it is in both of our interests to work together
more and more closely. The process of mutual recognition got a major boost with
the landmark visit of King Abdullah of Saudi Arabia to India and consequent
ratification of the New Delhi Declaration. This inclination of a major Gulf power
like Saudi Arabia to deepen and broaden ties with India points to the changing
geopolitical dynamics in both regions.
Moreover, Gulf countries are increasingly cooperating with India for military
training. Since Indias dependence on Gulf energy and the Gulf s dependence on
India and Asia as a future major market for oil exports will remain significant, the
security of Sea Lanes of Communication (SLOC) has become a critical component
within the ambit of strategic matters. It is not just oil, but the increasing movement
of merchandise imports and exports on the sea route spanning the vast arc of Indian
Ocean has also become a critical security concern for India and the Gulf countries.
The sheer number of Indian expatriates in the Gulf regions workforce makes a
strong case for deepening ties with India to manage domestic security. Countries like
Saudi Arabia have the potential to support India in her efforts for the educational
and social transformation of Indias vast Muslim population that constantly look
towards the Gulf region for moral and religious guidance.
India as a Bridging Power
Indias credibility and role as a neutral player in Asia may serve Gulf interests
in managing their emerging security and strategic objectives. Two crucial factors that
can possibly give the Gulf countries policy flexibility are Indias growing ties with
the US and stable ties with Iran and Israel. Indias strategic objectives attest to the
fact that the Gulf, South Asia and Central Asia are now strategically interactive and
interrelated regions. The objectives of India's quest for greater influence throughout
the Gulf are to prevent proliferation as well as terrorism. As a bridging power, India
could possibly leverage its links with both US and Iran to the benefit of the Gulf
countries. Unlike the US and other European powers that tie security cooperation
with sensitive issues such as human rights, democracy and regime change, Gulf
countries view India as a non-interfering partner to align with.
36
Conclusion
India maintains a substantial economic presence in the Gulf and is set to create
a significant political presence as well. Despite civilizational propinquities, historical
commercial linkages, and geographical proximity, the Gulf and India have failed
to capitalize on commonalities, which has prevented their association from truly
becoming the unbroken relation of cordiality. Nevertheless, the growing economic
presence of India in the Gulf and the Gulf s new geo-economic realities provide
the platform to synergize complementarities into multipronged stable relations. The
trend of mutual ignorance of the two regions is slowly reversing due to the growing
economic importance of India in the world and the Gulf 's increased interest in
building its relations with its immediate neighbor, against the backdrop of faltering
bonhomie with the West. The relationship between the two regions has been in
focus in the evolving interdependence centering on energy-economy dynamics and
changed geopolitical environment in the aftermath of the 9/11 attacks. The Look
East strategy of the Gulf provides an impetus for closer relations. It is therefore
necessary that since a sustainable relationship entails multifaceted cooperation,
India and the GCC countries should broaden relations on the strategic and political
levels. It is in the interests of both the GCC and India to recognize the others
potential as a serious trading partner, and further strengthen their external relations.
Both parties could nurture their relations in a constructive way by finding the right
balance between regionalism and multilateralism to excel in todays fast paced
economic arena. To sum up, geopolitical and geoeconomic complementarities drive
security and strategic aspects of the Gulf regions Look East Policy towards India.
While India's ambitions, capabilities, experience and interests all suggest that it
is capable of playing a major role in the Gulf, the Gulf countries see India as
a bridging power to shift their status quo security and strategic imperatives to
better align with the changed dynamics. The stakes are formidable, challenges are
mutual, potentials are huge and, hence, cooperation becomes imperative. This calls
for greater political will.
Selected References
Chanda, Nayan. Bound Together., Yale University Press, 2007.
Chanda, Nayan. The Early Globalizers. India and Global Affairs Journal
(October-December 2008): 58-65.
EXIM Bank. GCC Countries: A Study of Indias Trade and Investment
Potential. Occasional paper No. 110, 2006.
37
Indian Embassy Websites

Karayil, Sajitha Beevi. Does Migration Matter in Trade? A Study of India's
Exports to the GCC Countries. South Asia Economic Journal 8, no. 1 (2007): 1-20.
Koch, Christian. Gulf-Asia Relations: A Post-Cold War Geopolitical
Perspective. Gulf-Asia Bulletin, Issue no. 5 (Dubai, Gulf Research Center, 2008).
Pant, Girijesh. The Changing Gulf Market and India: Trends and Prospects. In
Perspectives on India and Gulf States ed. A. K. Pasha,. 112-126. New Delhi: Dtente
Publishers, 1999.
Pradhan, Samir Ranjan. Indias Export Potentials in the GCC: A Gravity
Model Analysis. UNESCAP, ARTNeT Report, Bangkok, 2007, available under
www.unescap.org/tid/artnet/pub/gcc_pradhan.pdf
Pradhan, Samir Ranjan. India, GCC and the Global Energy Regime:
Exploring Interdependence and Outlook for Collaboration. New Delhi: Academic
Foundation, 2008.
Rajamony, Venu. India-UAE Labor Relations. June 2008, Consulate General
of India, Dubai.
Secombe, Ian J. Labour Migration to the Arabian Gulf: Evolution and
Characteristics 1920-1950. Bulletin, British Society for Middle Eastern Studies 10,
no. 1 (1983): 3-20.
Endnotes:
1. For analytical convenience, Gulf region refers to the geopolitical entity comprising
member states of the Gulf Cooperation Council namely Bahrain, Kuwait, Oman, Qatar,
Saudi Arabia and the United Arab Emirates (UAE). Reference to other neighboring
countries namely Iraq, Iran and Yemen has also been made when required.
2. James Henry Breasted, University of Chicago archaeologist coined the term "Fertile
Crescent" around 1900, referring to a crescent-shaped region in the Middle East,
originally incorporating the Levant and Ancient Mesopotamia and extending to ancient
Egypt. The region is referred to as the "Cradle of Civilization due to its rich soil and is
also believed to be the original location of the Garden of Eden in the Bible because of
its fertility. For details see, Columbia Encyclopedia (2008). Columbia University Press.
3. During the ancient period, an Indian physician named Manka was brought to cure the
ailment of Caliph Harun Al-Rashid when Arab physicians of Baghdad failed and he
was also given a special position at the palace hospital.
4. Valedictory Address by Kamal Nath, Minister of Commerce and Industry, Government

of India on the eve of The 3rd India-GCC Business Conference (Industrial Forum)
which was held in Mumbai, India on May 29-30, 2007.
38

5. Indias Regional Trading Agreements (RTAs), Ministry of Commerce and Industry,
Government of India, available under http://commerce.nic.in/pressrelease/pressrelease_
detail.asp?id=1727.
6. http://commerce.nic.in/india_gcc_agreement.htm
39
Looking Beyond Tehran:

Indias Rising Stakes in the Gulf
Harsh Pant
In the last few years, Indias policy toward the Gulf region has often been
viewed through the prism of India-Iran relations. The international community,
and the West in particular, has been obsessed with New Delhis ties with Tehran
and has tended to ignore Indias much more substantive engagement with the Arab
Gulf states.
The extent to which Indian foreign policy towards the Gulf region has
undergone change since the end of the Cold War is evident from the fact that
a review of Indian foreign policy toward the region covering the time period
from 1947 to 1986 had argued that Indian policy towards the Gulf had been too
ideological and had paid insufficient attention to Indian national interests, especially
underlining Indias subdued ties with Iran, Saudi Arabia, and Israel1. Today, it is
precisely these three states around which Indias new regional approach is evolving.
However, Indian interests in the Arab Gulf remain far more substantive which
India has taken special care to nurture over the last several years.
Notwithstanding all the hype surrounding Indias ties with Iran, they remain
largely under-developed even as the significant stakes that India has in the Arab
Gulf often go unnoticed, though India has managed to significantly enhance its
presence in these states. This paper first examines the India-Iran relationship and
argues that this relationship remains an underdeveloped one notwithstanding all the
attention it has garnered in recent years. Subsequently, Indian interests in the Arab
41
Gulf states are highlighted to demonstrate the far greater stakes India has in the
region compared to Iran. Finally, the factors that are shaping Indias contemporary
relations in the Gulf are underlined.
India-Iran Ties: Nothing Strategic About It

Ever since India and the US embarked on the journey to transform their ties
by changing the global nuclear order to accommodate India, Iran has emerged as
a litmus test that India has to pass, from time to time, to the satisfaction of the
US policy-makers. Indias traditionally close ties with Iran have become a major
factor influencing how certain sections of the US policy-makers evaluate a USIndia partnership. India-Iran ties have been termed everything from an axis to a
strategic partnership and even an alliance. Some in the US strategic community
have suggested that a Tehran-New Delhi Axis has been emerging over the last
few years that could have an immense significance for the United States because
of its potentially damaging impact upon US interests in Southwest Asia and the
Middle East.
Given the obsession of the US policy-makers with Iran in the last few years,
India has been asked to prove its loyalty to the US by lining up behind Washington
on the question of Irans nuclear program at the International Atomic Energy
Agency (IAEA). The Bush administration stated clearly that if India voted against
the US motion on Iran at the IAEA, the Congress would likely not approve the
US-India nuclear agreement. Congressman Tom Lantos threatened that India will
pay a heavy price for a disregard of US concerns vis--vis Iran. India finally voted
in February 2006 with 26 other nations to refer Iran to the UN Security Council.
This was the second time India voted with the West on the issue of the Iranian
nuclear program. Despite this, many members of Congress continued to demand
that Washington make the nuclear deal conditional on New Delhis ending all
military relations with Tehran by pointing to a visit by Iranian naval vessels to the
Indian port of Kochi in June 2006 for five days of joint exercises that included
training for Iranian cadets.
The Bush administration insisted that it would oppose any amendment to
the nuclear pact that would condition cooperation with India upon Indias policies
towards Iran. However, the US-India Peaceful Atomic Energy Cooperation Act (also
known as the Hyde Act) that was signed by the President Bush in December 2006
contained a Statement of Policy section which explicated a few riders ensuring
Indias support for US policies toward the Iranian nuclear issue, in particular to
42
Looking Beyond Tehran: Indias Rising Stakes in the Gulf
dissuade, isolate, and if necessary, sanction and contain Iran for its efforts to acquire
weapons of mass destruction, including a nuclear weapons capability and the
capability to enrich uranium or reprocess nuclear fuel and the means to deliver
weapons of mass destruction. While this section of the Act generated considerable
domestic opposition in India, President Bush, while signing the Act, emphasized
that his administration would interpret this provision as merely advisory.
While the Bush administration itself, from time to time, expressed its concerns
about India-Iran ties, it refused to make them central to the negotiations over the
nuclear pact. Given the US Congress growing opposition to India-Iran ties and
its public expression of their views, the Bush administrations more considered
response, however, was not enough to assuage the critics in India.
The American focus on India-Iran ties has been highly disproportionate to
the substantive realities that underpin this relationship, a result more of a response
to the exigencies of domestic politics than to the regional political realities.
Interestingly, the Indian Left has also made Iran an issue emblematic of Indias
strategic autonomy and has used this stick to coerce the Indian government into
a following an ideological foreign policy. A close examination of the India-Iran
relationship, however, reveals an underdeveloped relationship despite all the spin
being put on it by both sides.
On the crucial issue of energy, Iran is merely responsible for about 8 percent of
Indian oil imports. Moreover, both the major energy deals signed with great fanfare
by the two sides are in limbo as of now. Indias 25-year, $22 billion worth agreement
with Iran for the supply of LNG has not moved an inch since signed in 2005 as it
requires India to build a LNG plant in Iran which would need American components
and this might end up violating the US Iran-Libya Sanctions Act. The other project
involving the construction of a 1700-mile, $7 billion pipeline to carry natural gas
from Iran to India via Pakistan is also stuck for a number of reasons. The present
government initially viewed the pipeline project as a confidence-building measure
between India and Pakistan, but when pressure started mounting the Indian Prime
Minister went so far as saying that he did not know if any international consortium
of bankers would underwrite the project given the uncertainties in Iran. The Indian
strategic community has never been in favor of this proposal because in their opinion
it ends up giving Pakistan too great a leverage over Indias energy security. Without
reliable security guarantees from Pakistan, the project is not going anywhere and
given the present uncertainty in Pakistan, it is unlikely that this project will take off
in the near future even if India and Pakistan can agree on the transit fees.
Both these projects have also brought home to Indians the unreliability of Iran
43
as a trade partner. There are differences between the national oil companies of Iran
and India over the legal interpretation of the contract for the export of LNG to
India. This deal was signed before Mahmoud Ahmadinejad was elected President
of Iran and was tied to a relatively low market price for crude oil. India considers
the deal final and binding while Iran has argued that it is not binding because it
has not been ratified. The Iranian Supreme Economic Council has refused to ratify
the 2005 agreement and has demanded an upward revision in price. Both India
and Pakistan have contended that Tehran offer a price for gas in line with global
practices for long-term contracts and have rejected Irans gas pricing formula wherein
the gas price is linked to Brent crude oil with a fixed escalating cost component.
The three states have now decided to get a realistic appraisal of gas prices through
an independent consultant, although Iran maintains that the consultants opinion
would not be binding. Amid the growing global isolation of Iran, sections of the
Indian government have suggested that Indias participation in the gas pipeline deal
might not give any strategic advantage to India, given the very low quantity (30
million standard cubic meters per day) of gas involved. Buying gas at the PakistanIndia border is being advocated as a better alternative. Moreover, it appears that the
Iranian gas is not the lowest priced option at the current price structure for India.
There is little evidence, so far, that Iran would be a reliable partner for India in its
search for energy security. A number of important projects have either been rejected
by Iran or have yet to be finalized due to its changing of terms and conditions.
There is bewilderment in India in so far as the US insistence on India not
to move forward with this project is concerned. Given the geographical realities,
the India section of the pipeline will only materialize after Iran and Pakistan have
completed their part. If the US allows Pakistan to go ahead, then it implies that it
has no objections to the deal per se. However, if the US puts pressure on Pakistan
which then drags its feet on the project, there is no issue as far as India is concerned.
It is not India but Pakistan that is central to the finalization of the deal, and so
pressure on India to pull back from the pact seems unwarranted. In the latest move,
India has made it clear that while it remains interested in the pipeline project it
would pay for the gas only after it is received at the Pakistan-India border, would
not pay penalty in case of a delay, and was opposed to Irans demand for revision
in gas prices every three years2. The conclusion of the US-India nuclear agreement
and plunging prices of crude oil seems to have given India the diplomatic leverage
it did not have before.
The nuclear issue is equally complex. India and Iran have long held significantly
different perceptions of the global nuclear order. Iran was not supportive of the
44
Indian nuclear tests in 1998 and backed the UN Security Council Resolution that
asked India and Pakistan to cap their nuclear capabilities by signing the NPT and
the CTBT. Iran repeatedly has called for a universal acceptance of the NPT, much
to Indias discomfiture. Though Iran has claimed that this was directed at Israel, the
implications of such a move are also far-reaching for India. Irans position on several
other issues crucial to India has been against Indian interests. Indias position on the
Iranian nuclear question is relatively straightforward. While India believes that Iran
has a right to pursue civilian nuclear energy, it has insisted that it should clarify the
doubts raised by the IAEA in so far as Irans compliance with the NPT is concerned.
India has long maintained that it does not see any further nuclear proliferation as
being in its own interests. This position has as much to do with Indias desire to
project itself as a responsible nuclear state as with the very real dangers that further
proliferation in its extended neighborhood would pose to its own security. It was
with this mind that India not only voted against Iran at the IAEA in 2005 and
2006 but also went ahead and imposed a ban on the export of any material and
technology to Iran that could be used in developing nuclear weapons and delivery
systems, as demanded by the Security Council. The conclusion of US-India nuclear
deal saw Iran warning that the pact had endangered the NPT and would trigger
new crises for the international community3.
Much commentary has been written on growing defense ties between India
and Iran but India has more substantive defense ties with the Arab world. With
Iran, the defense relationship remains not only sporadic and tentative but also
circumscribed by Indias growing linkages with Israel, Indias second-largest defense
partner4. India-Iran ties are also diverging on Afghanistan where recent indications
that certain sections of the Iranian military, especially the Revolutionary Guards,
may be arming the Taliban so as to weaken the US military in Afghanistan are
troubling for India. The underlying reality is that India has far more significant
interests to preserve in the Arab Gulf, and as tensions rise between the Sunni Arab
regimes and Iran, Indias larger stakes in the Arab Gulf might propel it further in a
direction not very conducive for healthy India-Iran ties.
India has been accused of following a heavily ideological foreign policy
throughout the Cold War years, especially in the Gulf. But in the last decade and a
half, India has changed the trajectory of its foreign policy towards the Middle East
and three states around which Indian foreign policy in the region revolves today
are Iran, Israel and Saudi Arabia. Iran is one of the pivots, not the sole or even the
most important one, and there is hardly anything strategic in Indias relationship
with Iran.
45
India and the GCC States: Something Strategic About It

Indias engagements with the GCC states have gathered far greater momentum
in the last few years even as Iran continued to hog all the limelight5. Indias desire
to secure energy supplies as well as to consolidate economic and trade relations and
the Look East policy of the Gulf States has allowed the two to carve a much more
substantive relationship than in the past.
In January 2006, Saudi King Abdullah bin Abdul-Aziz al-Saud visited India
(along with China), a trip some commentators labeled a strategic shift in Saudi
foreign policy and reflective of a new era for the Kingdom6. It was King Abdullahs
first trip outside the Middle East since taking the throne in August 2005 and so was
viewed as highly significant. It was the first visit of a Saudi monarch to India since
King Sauds brief visit to the subcontinent in 1955. Relations subsequently froze, as
Riyadh sided with Washington during the Cold War, and New Delhi drifted closer
to Moscow. Saudi-Indian ties strained further after the Indian government failed
to condemn the 1979 Soviet invasion of Afghanistan while the Saudi government
helped bankroll the opposition Afghan mujahideen. Indias Gulf policy became a
casualty of the Cold War structural realities. However, with the Cold War over, such
impediments to Saudi-Indian and more broadly Gulf-Indian relations evaporated.
The Saudi kings visit to India was also a signal to the broader GCC community
to build a stronger partnership with India. And so, in an attempt to have a structured
exchange on bilateral and collective security issues, it has been decided that the
India-GCC dialogue that was held annually on the sidelines of the United Nations
General Assembly will now be held in a GCC country or in New Delhi annually.
Indias stakes in the GCC states are substantive and rising.
Trade Ties: The economic dimension of Indias Gulf policy has become more
pronounced in recent years. As a group, the GCC is Indias second largest trading
partner. It is the largest single origin of imports into India and the second largest
destination for exports from India. Bilateral trade between India and the GCC is
expected to rise above $25 billion by 2010. The UAE by itself is among Indias five
largest trading partners and Indias top trading partner in the entire Middle East,
accounting for 75 percent of Indias exports to the GCC countries and 6 percent of
Indias global exports7. Bilateral trade between India and the UAE is valued at $14
billion, having tripled over the last five years8. The global financial meltdown and
the specter of recession in the US and Europe is further prompting India to turn to
Gulf States sitting on huge resources looking for investment opportunities.
The GCC countries remain a major destination for Indian investments even as
India is making a concerted attempt to encourage GCC investment in India. India
46
is hoping that major GCC states such as Saudi Arabia, UAE and Oman would
participate in Indias planned expansion of infrastructure. With a rising demand for
infrastructure development, India is looking for large investments from the Gulf,
which is flush with funds due to the recent surge in oil prices. The Gulf States
meanwhile are interested in human resources from India to develop sectors as
varied as information technology, construction, transportation and services. As with
Saudi Arabia and China, energy infrastructure investment is a major component in
the development of Saudi-Indian relations. During the state visit, King Abdullah
and Indian Prime Minister Manmohan Singh signed an Indo-Saudi Delhi
Declaration calling for a wide-ranging strategic partnership, putting energy and
economic cooperation on overdrive, and committing to cooperate against terrorism9.
According to some reports, the King waived off Saudi bureaucratic concerns about
precedents the declaration might create with regard to its relations with Indias
neighbors, especially Pakistan by calling India a special case.10
One of the largest Indian joint ventures abroad is the Oman-India Fertilizer
Project at Sur in Oman that aims to produce 1.6 million tons of urea and 250,000
tons of ammonia annually. There are more than 100 Indian joint ventures in Saudi
Arabia and about half that number of Saudi joint ventures in India. As King
Abdullah visited New Delhi, close to 80 top Saudi businessmen participated in
the first Saudi Arabia in India business exhibition. A new Saudi-India Joint
Business Council will provide an institutional framework to expand bilateral
economic ties. Saudi authorities hope that such a channel can tap Indian expertise
and help it diversify its economy in fields ranging from information technology and
biotechnology to education and small business development. Saudi Arabia is also
planning to establish an India investment fund that would be primarily for Indian
infrastructure projects. Similar institutional arrangements are being evolved with
other Gulf States as well. India has signed a pact on a joint investment fund with
Oman, with a contribution of $50 million from each side, which is expected to
channelize investments from Oman to India.
Energy Ties: With an economy that is projected to grow at a rate of 7-8 percent
over the next two decades, meeting its rapidly increasing demand for energy is
one the biggest challenges facing India. Burgeoning population, coupled with rapid
economic growth and industrialization has propelled India into becoming the sixth
largest energy consumer in the world, with the prospect of emerging as the fourth
largest consumer in the next 4-5 years11. Energy is clearly the driving force in GulfIndia relations. Riyadh is the chief supplier of oil to Indias booming economy, and
India is now the fourth largest recipient of Saudi oil after China, the United States,
47
and Japan12. Indias crude oil imports from the Saudi kingdom will likely double in
the next 20 years.
The GCC countries supply 45 percent of Indias petroleum requirements,
Along with the Saudis who are responsible for a quarter, other major suppliers
are Kuwait and the UAE. Qatar is an annual supplier of 5 million tons of LNG
to India and it is expected that Qatari gas exports to India will rise to 7.5 million
tons from 2009. Qatar remains Indias exclusive supplier of natural gas while Oman
is Indias largest crude supplier. The Iranian governments decision to renege on
some oil supply commitments in the aftermath of Indias vote against Iran at the
International Atomic Energy Agency (IAEA) has also spurred New Delhi to
diversify suppliers.
During his visit to India, the Saudi king emphasized his countrys commitment
to uninterrupted supplies to a friendly country such as India regardless of global
price trends. The private Indian energy firm Reliance will invest in a refinery and
petrochemicals project in Saudi Arabia, and Indias state-owned energy firm, Oil
and Energy Gas Corporation, will also engage Saudi Arabia as its equity partner for
a refinery project in the Indian state of Andhra Pradesh.
Defense Cooperation: Indias trade and energy security is inextricably linked
to the security of the Straits of Hormuz and Bab el-Mandeb. With this in mind,
Indian Navy is regularly visiting Gulf ports and training with regional states. In
August 2007, the Indian Navy undertook a series of naval exercises with a number
of Gulf States thereby lending its hand to Indian diplomacy in expanding Indias
reach in the region. It made port calls and conducted exercises with the navies of
Kuwait, Oman, Bahrain, Saudi Arabia, Qatar, United Arab Emirates, and Djibouti
when it embarked on a 48 day tour of the Gulf region. It also used this opportunity
to engage with the navies of other major powers in the region such as the US, the
UK, and France. The Indian naval warships have also been deployed in the Gulf
of Aden to carry out anti-piracy patrols on the route followed usually by Indian
commercial vessels between Salalah (Oman) and Aden (Yemen). Gulf of Aden is
a strategic choke point in the Indian Ocean and provides access to the Suez Canal
through which a sizeable portion of Indias trade flows.
India has cultivated close security ties with major GCC countries such as the
UAE, Qatar, Oman and Bahrain. The defense cooperation agreements that India
has with these states are similar to the ones India has with states like the US, the
UK, France, Germany, Australia and Japan. India and the UAE have decided to
streamline their defense relationship which has been largely dominated by naval
ship visits and training exchange programs. Now, the focus is shifting to possible
48
joint development and manufacture of sophisticated military hardware. The UAE

authorities have captured and swiftly extradited to India a number of high-profile
terror suspects. Though India and the UAE do have an extradition treaty in place,
several deportations have taken place without invoking the treaty, showing high level
of mutual understanding between the two states13. Defense cooperation between
India and Qatar is also extensive involving training of military personnel, joint
exercises and service-to-service information sharing. Consultations are underway
between India and Oman regarding the possibility of the Sultanate providing
berthing facilities for the Indian warships deployed in the region.
Security ties between New Delhi and Riyadh are also developing though
only gradually. The Indian military has been fighting separatist groups in its
northern state of Kashmir for several years now. Thousands of lives have been
lost because of Islamist terrorism or the associated crackdown. Saudi financiers
bankroll many of the Pakistani and Kashmiri groups that conduct the terrorism14.
The Indian government would like its Saudi counterparts to manage the funds
transferred to India better, a substantial portion of which ends in Islamist pockets.
The Indian prime minister and Saudi king used their New Delhi meeting to sign
a memorandum of understanding dealing with terrorism, transnational crime,
and underworld operations. Both governments agreed to cooperate toward the
conclusion of a comprehensive convention on international terrorism before the
UN General Assembly and to establish an international counterterrorism center as
called for by the International Conference on Counter-Terrorism held in Riyadh
in February 2005. Riyadh, for its part, has agreed to support New Delhis petition
for observer status in the Organization of Islamic Conference. It has also been
supportive of Indian moves to reduce tension in Kashmir and has tried to move
beyond its traditional approach of looking at India through a Pakistani prism.
The Iran Factor: New Delhi has also cultivated Riyadh for strategic reasons.
To Indian strategists, any ally that can act as a counterweight to Pakistan in the
Islamic world is significant. Initially, New Delhi sought to cultivate Tehran, but
such efforts stumbled in recent years as the Islamic Republic has adopted an
increasingly aggressive anti-Western posture15. India hopes Saudi Arabia might
fill that gap. Indeed, Iranian nuclear ambitions have helped draw New Delhi and
Riyadh closer.
The Saudi government has its own reasons for cultivating Indian ties. Saudi
Arabia and Iran have long competed for power and influence in the Gulf16. The 1979
Islamic Revolution in Iran added a new edge to the rivalry, as Iranian ayatollahs
increasingly sought to challenge the Saudi officials on religious matters, such as the
49
rules and regulations surrounding the hajj or pilgrimage to Mecca. The fact that
about 40 percent of Saudi Arabias oil-producing eastern province is Shiite and
resents Wahhabi rule worries Riyadh17. The anxiety is mutual. In 1994, the Iranian
intelligence ministry designated Salafi terrorism as the primary threat to Iranian
national security18. Tehrans nuclear drive, Iranian interference in neighboring Iraq,
and Iranian president Mahmoud Ahmadinejads aggressive rhetoric further raises
Saudi anxiety of a resurgent Iran, and were subjects of discussion during King
Abdullahs meeting with the Indian prime minister. The security consequences of
a rising Iran are equally significant for other Arab Gulf states. It is interesting to
note that during the visit of the Indian External Affairs Minister to Abu Dhabi
earlier this year, the two states discussed Irans occupation of the three UAE islands
(Greater Tunb, Lesser Tunb, and Abu Musa).19
The Indian Diaspora: While India is not a Muslim-majority country, it still hosts
the second-largest Muslim population in the world, a constituency that remains
interested in Saudi Arabia as the site of the holy shrines at Mecca and Medina.
There is already significant cultural interchange. The approximately 1.5 million
Indian workers constitute the largest expatriate community in the Kingdom.20
Indians are the largest expatriate community in the GCC states, numbering
around 4 to 5 million. Indian expatriate labor constitutes around 30 percent of the
total population of the UAE and they have significant presence in Bahrain, Oman,
and Qatar. India earns foreign exchange worth around $6 billion annually from
its Gulf expatriates. The remittances of expatriate Indian workers in the Gulf have
contributed significantly to Indias economic resurgence even as there have been
growing concerns in recent years about their living and working conditions in the
host countries. Towards this end, India is pursuing manpower and labor agreements
with Gulf States intended to help Indian workers in the region.
In essence, Indian interests in the Arab Gulf are significant, they are evolving
and India is carefully nurturing these ties. This is largely a consequence of the
changing salience of factors that have shaped Indias Gulf policy.
Factors Shaping Indias Gulf Policy

Domestic constraints imposed by the large Muslim community in India have
traditionally been a significant factor in shaping Indias policy toward the Gulf
region. While this remains a potent variable, there are signs that Indian foreign
policy has had some success in recent times in overcoming this constraint. The
loosening of the structural constraints imposed by the Cold War has given India
50
greater flexibility in carving its foreign policy in the Gulf. The most notable change
has been Indias attempts to enhance its ties with Israel on the one hand and with
its traditional antagonists such as Iran and Saudi Arabia on the other21. India is
relatively more open about its gradually strengthening ties with Israel despite
apprehensions in some quarters that the Arab world will not very take very kindly
to these developments. On the contrary, it seems that the Arab world has reacted
cautiously so far and has deepened its engagement with India for fear of losing
India wholly to Israel. Whereas Pakistan tended to dominate Indian foreign policy
toward the Gulf particularly during the Cold War years, it has become less salient
in Indian foreign policy calculus given Indias desire to emerge as a major regional
and global actor.
Indias burgeoning demand for energy is another major factor that is
increasingly shaping Indias approach towards Middle East as well as its broader
foreign policy priorities. Indias greatest challenge as of now is to ensure successful
diversification of sources for oil procurement to minimize possibilities of disruption
in supplies. It is towards this end that India has devoted its diplomatic energies in
recent times. Not surprisingly, perhaps, the focal point of Indias energy diplomacy
has been the Middle East as around 65 percent of its energy requirements are met
by this region.
China is becoming a major player in global politics and its influence in the
Gulf is on the rise. Though Indias relations with China have improved considerably
in the last few years, this relationship remains by and large competitive, if not
outrightly conflictual. This is particularly true with regard to the two giants trying
to compete for global energy resources. Moreover, Indias aspirations to emerge as
a major global power may also lead it to counter Chinas growing influence around
the globe. Chinas ties with major Gulf States are on an upswing and this would be
a major factor in how India shapes its regional policies in the long term.
Finally, the US remains the predominant player in the Gulf despite some of the
recent setbacks. Indias ties with the US have dramatically expanded in the last few
years and this has already emerged as a significant factor in shaping Indian foreign
policy towards the Gulf. The most visible manifestation of this has been Indias
attempt to recalibrate its ties with Iran. The shadow of the US will loom large over
Indian foreign policy in the years to come especially if the conflict between the
US and Iran gets intensified. India is trying hard to project itself as a responsible
nuclear power, especially after the signing of the civilian nuclear cooperation
agreement with the US. It will be very reluctant to challenge US non-proliferation
priorities in the Gulf that views Iranian nuclear program as a major challenge. It is
51
in Indias interest now that nuclear proliferation in its neighborhood is contained.

Meanwhile, a deeper engagement with the Arab Gulf states will also blunt the
criticism that Indian foreign policy has become too obsessed with the US and its
foreign policy agenda.
India is looking beyond its old approach as it seems to have reached a turning
point in its relations with the Gulf States. The revival of trade and investment
between the Gulf and India, featuring large movements of goods and capital, is
founded on the search for energy sufficiency, a new security landscape and very
rapid economic growth. Though there has been no articulation of a broader Gulf
or a Middle East policy by India, it can no longer rely on its past approach to the
region that has become not only outdated but is thoroughly inadequate to meet
the complex challenges of the future. As a consequence, India is now focusing on a
pragmatic engagement with all sides and has tried to shed its covertly ideological
approach towards the region. Most countries in the Gulf are also now seeking
comprehensive partnerships with India based on a recognition and appreciation for
Indias role in shaping the emerging regional and global order. The challenge for the
two sides now is to sustain the present momentum.
Endnotes:
1. P.R. Mudiam, India and the Middle East (London: British Academic Press, 1994).
2. Amitav Ranjan, India to Step up Pressure for Iran Gas Line, Indian Express, November
1, 2008.
3. Deal Will Trigger New Crises, Says Iran, The Hindu, October 6, 2008.
4. On India-Israel defense cooperation, see Harsh V. Pant, India-Israel Partnership:

Convergence and Constraints, Middle East Review of International Affairs 8, no. 4
(December 2004): 60-73.
5. The GCC includes Saudi Arabia, the UAE, Qatar, Oman, Kuwait and Bahrain.
6. International Herald Tribune, January 26, 2006.
7. India-UAE Ties in Trade, Commerce below Potential, The Hindu Business Line, May
29, 2007.
8. Talmiz Ahmad, Traditionally Strong Links, Gulf News, March 12, 2007.
9. Delhi Declaration, Joint Declarations & Statements, Ministry of External Affairs,

New Delhi, India, January 27, 2006.
10. The Tribune (New Delhi), January 27, 2006.
11. Ashish Vachhani, Indias Energy Security Dilemma, The Hindu Business Line, April
26, 2005.
52

12. The Hindu Business Line (Chennai), March 29, 2005.
13. Vinay Kumar, A Milestone in India-UAE ties, The Hindu, December 10, 2002.
14. Husain Haqqani, The Ideologies of South Asian Jihadi Groups, Current Trends in
Islamist Ideology, vol. 1, 23-4; J. Millard Burr and Robert O. Collins, Alms for Jihad
(Cambridge: Cambridge University Press, 2006), 26-50.
15. On the reasons behind India-Iran convergence since the end of the Cold War, see Harsh
V. Pant, Contemporary Debates in Indian Foreign and Security Policy: India Negotiates Its
Rise in the International System (New York: Palgrave Macmillan, 2008), 113-129.
16. R.K. Ramazani, Revolutionary Iran: Challenge and Response in the Middle East (Baltimore:
Johns Hopkins University Press, 1986), 8-11.
17. Anthony H. Cordesman, Saudi Arabia Enters the Twenty-First Century: The Political,
Foreign Policy, and Energy Dimensions (London: Praeger, 2003), 206.
18. Mahan Abedin, The Iranian Intelligence Services and the War on Terror, Terrorism
Monitor, Jamestown Foundation, May 20, 2004.
19. India, UAE Discuss Boosting Security, Military Ties, Deccan Herald, May 14, 2008.
20. Divya Pakkiasamy, Saudi Arabia's Plan for Changing Its Workforce, Migration
Information Service, November 1, 2004.
21. On Indias balancing act between wooing Israel and its other foreign policy priorities in
the Middle East, see Pant, Contemporary Debates in Indian Foreign and Security Policy,
op. cit., 131-147.
53
Indias Strategic Challenges

in the Indian Ocean and the Gulf
C. Raja Mohan
Introduction
That independent India nursed grand ambitions in the Indian Ocean and the
Persian Gulf is well-known. After all it inherited the notions of maritime primacy,
the expansive definition of a strategic frontier stretching from Aden to Malacca,
and a lead role in the security of the Gulf from the British Raj. A number of factors,
however, led to these ideas receding into the background and Indias strategic
marginalization in the first decades after independence. Indias preferred socialist
path towards national development immediately after independence saw a relative
decline in its global economic weight. Thanks to the new focus on import substitution,
Indias traditional commercial links with the neighboring regions steadily eroded. The
Partition of the Subcontinent turned the abundant military energies of the India
center on itself and compelled India to hunker down to a defense of its new borders
with Pakistan and China and abandon the expeditionary and constabulary tradition
of its armed forces under the Raj.1 It also forced India to devote extraordinary
diplomatic energies towards neutralizing the Pakistan factor that severely constrained
its role in the Islamic world as a whole and the Gulf in particular. The geopolitical
consequences of the Cold War on the Subcontinent also saw India drift away from
the West into a de-facto alliance with Moscow and isolate itself from important
55
regional actors on such important issues as Soviet occupation of Afghanistan in the

1980s. As a consequence, both the Indian Ocean and the Gulf, while remaining part
of its foreign policy rhetoric, became far removed from its strategic priorities. For
much of the post-independence period, its preoccupation was with the immediate
neighborhood in the Subcontinent and the conflict with China. Indias abiding sense
of internationalism was channeled mainly through the non-aligned movement and
so called third worldism. The Gulf and the other littoral states of the Indian Ocean
had little real engagement with India outside the NAM arena.
Significant changes in Indian foreign and security policies over the last few years,
however, have elevated the Gulf and the Indian Ocean to the top of Indias national
security agenda. If economic reforms launched in the early 1990s arrested Indias
relative decline, the sustained high growth rates in this decade hold the promise that
the nation may be on its way to becoming one of the worlds leading economies. Indias
new emphasis on regionalism has inevitably led to efforts at economic integration
with the entire Indian Ocean littoral, especially Southeast Asia and the Gulf. A
newly liberated Indian business class has boldly stepped out into the world, making
its presence felt far and wide. Indias outbound investments are now almost equal to
its inward foreign direct investment. Rapid economic growth has also made available
significant resources for defense modernization and begun to inject a new outward
orientation to its armed forces, especially the Navy. The end of the Cold War has freed
India to pursue a simultaneous improvement in its relations with all the major powers,
including the United States, Europe, Japan, China and Russia. The transformation of
Indias relations with the United States under the Bush Administration has opened up
new political spaces for New Delhi in Asia and the Indian Ocean. A booming economy
at home, a benign international environment, and expanding defense capabilities have
positioned India to play a larger role in the Indian Ocean and the Gulf.2 After decades
of relative disinterest in India, the region now is paying attention to Indias potential
impact on the security dynamics of the Gulf and the Indian Ocean.
Indias security interests in the region are easy to enumerate. High on the list
is reliable access to natural resources. An India that grows at 7 to 9 per cent will
increasingly depend on natural resources from other countries to sustain higher levels
of prosperity at home. Given its own limited natural resource endowment, India is
already under pressure to ensure long-term access to energy and mineral resources in
the Gulf and the Indian Ocean littoral. If India becomes a food importer in the future,
its external dependence will acquire even greater salience. Resource security will also
involve developing special political relationships with the key resource rich nations
and the military capabilities to protect the sea-lanes of the Indian Ocean. India also
56
Indias Strategic Challenges in the Indian Ocean and the Gulf
has an interest in preventing hostile powers from either denying access to resources or
disrupting the maritime trade routes. As India globalizes, the size of its diaspora will
continue to expand and place new demands on protecting its expatriates in the region.
India has a high stake in preventing the emergence of failed states in the region which
in turn could become havens of international terrorism and religious extremism.
Given its own large Islamic population, India would like to see the evolution of the
Gulf towards political modernization and religious moderation. India would also
prefer to see the Gulf States avoid siding with Islamabad in its disputes with New
Delhi and keep away from the internal politics of the Subcontinent. In pursuing
these expansive interests in the Gulf and Indian Ocean, New Delhi faces a number of
challenges. The following is an examination of some of the key challenges.
Refashioning the Raj Metric
As rapid economic growth restores Indias natural position at the centre of the
Indian Ocean, it has been inevitable that the many ideas of the British Raj have
begun to reappear in New Delhis strategic discourse. After years of rejecting power
politics and emphasizing the importance of international norms, New Delhi has
begun to lean towards greater strategic realism.3 The notion of an extended perimeter
of national security involving the Gulf and the Indian Ocean littoral, the belief that
India must undertake a more purposeful role in the region, and a willingness to devote
larger resources for such missions are all now manifest in the Indian debate.4
This important shift towards the self-perception of a great power, which
involves accepting higher security responsibilities, encounters considerable resistance
from the residual thoughts on anti-imperialism, collective security and national
autonomy. The ambiguity about the use of its military forces for political ends
beyond its own borders continues to persist. Although India has been a major
participant in the United Nations Peace-keeping Forces over the decades, it has
been reluctant to join international military coalitions outside the UN framework.
India debated long and hard during 2002 before deciding to escort the US naval
assets through the Malacca Straits. In 2003, Indias political leadership, after a
prolonged debate at the highest levels, ruled out a proposal to send a division of
troops to Iraq. At the end of 2004, it quickly joined the international coalition to
provide relief to the tsunami victims in the Indian Ocean. The Indian Navy took
a bold step in organizing multilateral naval exercises with the US, Japan, Australia
and Singapore in September 2007. These exercises, however, received a lot of flak
from the leftist parties which were at the time part of the ruling coalition. While
an outward looking Navy was itching for a larger role in the Indian Ocean, the
57
political leadership seemed in two minds. There was also considerable hesitation
within the political leadership before it allowed the Navy to confront the Somali
pirates in the Gulf of Aden. This vacillation is not unusual for democracies, where
big shifts in policy can only be implemented in an incremental fashion. Underlying
this vacillation is the unfinished debate on the terms and conditions under which
India could use force beyond borders.5 That in turn is part of the larger question
whether India is ready to assume its responsibilities as a major power.6
Recent research on British Indian history has unveiled a broad Indian role in
the Indian Ocean littoral during the 19th and early 20th centuries that was not merely
a derivative of Londons policies but was driven by Indias own geographic interests.7
There is no doubt that a rising Indias regional profile may eventually approximate to
that of the British Raj in many of its aspects the engine of regional growth, a major
provider of security, and an underwriter of collective goods. This broad generalization,
however, must be tempered by some realities. The political context of the region is
vastly different from the time when the Raj exercised uncontested dominance over the
Gulf and the Indian Ocean. Post-colonial India neither has the resources of British
India nor can it conduct policy in terms of the Raj lexicon. India must necessarily
be cautious, lest its new expansive strategic articulation is perceived as a design for
regional hegemony. Put simply, the metric of the Raj is a useful way of thinking about
the unfolding expansion of Indias capabilities, its geographic centrality in the Indian
Ocean, and its potential for a leadership role in the region. Yet, India has a long way
to go to before it can acquire the kind of primacy the Raj enjoyed in the region.
India, therefore, needs a strategic vision that is ambitious in scope but leavened by a
modesty that maintains an effective balance between its objectives and resources.
Restoring the Subcontinents Strategic Unity
The dominance of the Raj over the Indian Ocean and the Gulf was predicated
on the unity of the Subcontinent that emerged during the 19th century. The Partition
of the Subcontinent in turn rendered it impossible to sustain the defense of the Gulf
and the maintenance of order in the Indian Ocean from the Subcontinent. That
British concerns about defending the Western interests in the Gulf had something to
do with the Partition of the Subcontinent is a view strongly held in India.8 Londons
distrust of the Congress nationalists, its romanticization of the martial races in the
Punjab and the North Western parts of the Subcontinent, and the prospect that
the Muslim League and Pakistan might be more supportive of Western objectives
were surely of some consequence in the run up to the Partition. However, a more
dispassionate view might have to acknowledge that at the end of the Second World
58
War, many strategic planners in Delhi and London had clearly foreseen that the
Partition of India will make it impossible to sustain the imperial defense system
across the Indian Ocean, especially in the Gulf.9 The short-lived experimentation
with CENTO and SEATO only underlined the validity of that assessment. It
needed the direct and full strategic commitment of the new superpower, the United
States, to restore some credibility to the regional security arrangements.
The Partition of the Subcontinent and its principal strategic consequence,
Indias unending conflict with Pakistan, significantly constrained New Delhis
ability to realize its objectives in the Gulf. Despite considerable political goodwill
for India in the Middle East and the Gulf, Islamabad successfully mobilized some
support in its conflicts with India, especially on Jammu and Kashmir. Although
it was largely symbolic, it accentuated Indias national security anxieties, as it
coped with the internal challenge of integrating its large Muslim minority and the
external one of Pakistans hostility. India sought to overcome the Pakistan factor in
the Middle East through a number of initiatives, none of them entirely successful.
It gave strong support for Arab nationalism and aligning its positions with that of
the Arab world; but that was of no lasting consequence for the management of the
security challenges in the Gulf. India also sought to join the Organization of Islamic
States, but was rebuffed because of Pakistans intense hostility. Indias preference for
secular regimes in the Middle East increasingly aligned it with the Republicans in
Egypt, Syria and Iraq and distanced itself from the conservative Kingdoms.10
Looking ahead, minimizing the conflict with Pakistan is a necessary condition
for a larger Indian role in the Gulf and the Islamic world as a whole. On the face of it,
this would seem an impossible condition to fulfill. Some in India would argue that a
stronger economy and the emerging convergence of many economic interests with the
Gulf and the Middle East will help neutralize Pakistan in the region. Nevertheless,
there is an increasing awareness in official New Delhi that its expansive international
ambitions require a successful pacification of its neighborhood. As part of its search
for a peaceful periphery, India has made a determined bid to improve relations with
Pakistan since their last conflict in Kargil during the summer of 1999. While the
Indo-Pak peace process remains shaky, and has become vulnerable after the dramatic
terror attack on Mumbai at the end of November 2008, it has certainly produced one
of the more productive periods of bilateral relations, including a historic negotiation on
Jammu and Kashmir, the first since 1962-63. Whether it generates the desired result
of a comprehensive normalization of bilateral relations, the very attempt at improving
ties with Pakistan will create political space for India in the Middle East and make it
easier for the Gulf States to deepen their strategic partnerships with New Delhi.
59
Strategic Coordination with the United States
Amidst the significant evolution of Indo-US relations, marked by the civil

nuclear initiative and deepening defense ties, there have been dramatically divergent
interpretations of where the bilateral relations are headed. If enthusiasts have talked
about the emerging alliance between the two nations, the critics have opposed it
for the very same reason.11 Meanwhile skeptics in the United States and India
have pointed to the huge divide separating the interests and objectives of the two
countries, especially in the Gulf and the Middle East. Many in the United States
have insisted that New Delhi must go through a loyalty test on Iran before it
could be acknowledged as a real strategic partner of Washington. Considerable
recent literature on Indo-US relations is focused for example on differences over
Iran.12 Every such demand in Washington has been met with pressure in New
Delhi to demonstrate the independence of Indias foreign policy towards Iran and
the Gulf. This public sparring between New Delhi and Washington, however, masks
a number of propositions about the emerging Indo-US partnership.
First, New Delhi is unlikely to ever become a junior partner of Washington.
India will never become a Britain or Japan to the US, ready to endorse every twist and
turn in American policies. While New Delhi is eager for deeper political and security
cooperation with Washington it remains fully aware of the widespread resentment
against US policies in the region. Second, there are bound to be significant strategic as
well as tactical differences between the policies of the two countries in the Gulf and
the Middle East. These include the current US imagery of the Great War on Terror,
the approach to religious extremism, and the elevation of proliferation above all other
geopolitical considerations. Third, despite these differences, there is a broad strategic
parallelism between the interests of India and the United States on energy security,
protection of the sea-lanes, maritime policing, and counter-terrorism. These shared
interests can be pursued without India and the United States having to construct an
alliance-like relationship.13 For the foreseeable future, India might be quite happy to
benefit from a free ride on the US role as the principal security provider in the Gulf. So
long as India does not stand directly in the way of US policy in the Gulf, Washington
should have little concern about New Delhis rising profile in the region. Meanwhile,
there can be steady expansion of Indo-US security cooperation, without any expectation
that either side will automatically align with the other on every single issue.
An autonomous India, that fully shares the core political values and long-term
objectives of the United States in the Gulf could be a more valuable partner for the
United States than a reflexive follower in the region. This limited agenda between the
two could be managed by what some have called a strategic coordination between the
60
policies of India and the United States in the Gulf, the Indian Ocean and Southeast
Asia.14 Whether this will lead to mutually acceptable burden-sharing between the two
nations in the Gulf and the Indian Ocean, must be left to the future and will depend,
over the long term, on the prospects of the US shifting towards the concept of offshore balancing in theatres of vital national concern to it. In the more immediate
term, India would want the new Administration to persist with President Bushs
empathy with New Delhis political aspirations, while adopting new approaches that
significantly reduce the current resentments against Washington in the Middle East.
Limiting Chinas Influence
For much of the 19th century, Indias role in the Gulf was shaped, by the Great
Game between Britain and Russia. After the Second World War, the Great Game
morphed into the Cold War between Washington and Moscow that independent India
had to deal with. None of this history, however, prepares India, the Gulf and the US to
cope with the rise of China and its impact on the Gulf and the Indian Ocean littoral.
Chinas own engagement with the region has gone beyond the supply of missiles and
other advanced military technologies to select nations in the Gulf. The very same
interests that drive Indian policy in the region resource security and protection of
sea-lanes are encouraging China to raise its profile in the Gulf and the Indian Ocean.
As it becomes the second largest economy in the world, China is determined to secure
the supply of energy, and mineral and agricultural resources of the region. At the same
time, the Gulf and Indian Ocean littoral states are beginning to see that the rise of
Asia is offering a valuable alternative to their traditional dependence on the West for
economic assistance and military support. This has created an entirely new context for
thinking about the balance of power throughout the entire region.
Implied in the rise of Asia is also a rivalry between India and China for political
and economic influence in the region. Although geography, historical links and
cultural similarities offer India many advantages over China in the Gulf and the Indian
Ocean, Beijing appears to have pulled ahead of New Delhi in its recent outreach to
the region. India, however, is determined to catch up and reinforce its privileged
position in the region. As a consequence, from Burma to east coast of Africa, India
is trying to match Chinese economic and diplomatic initiatives. Although China
outspends India in the region, it also brings with it more negatives.
Of particular concern for India is the growing Chinese maritime profile in the
Indian Ocean.15 Besides more regular forays into the Indian Ocean by the Chinese
Navy, Beijing is trying to build a range of maritime facilities all across the Indian
Ocean the Cocos Island in Burma, Chittagong in Bangladesh, Hambantota in Sri
61
Lanka, and Gwadar in Pakistan. China is also making a sustained effort to cultivate
special political relationships with key island states in the Western Indian Ocean
Maldives, Mauritius and Seychelles all of which enjoy old security ties with
India.16 Given its old fears of Chinese encirclement, India is seeking to counter
this string of pearls strategy by stepping up pressure on its smaller South Asian
neighbors and the island states to avoid long-term strategic entanglement with
China. Beijing, in turn, believes that given its vulnerability to US pressures in the
Malacca Strait, it needs to strengthen its maritime presence in the Indian Ocean,
develop reliable maritime infrastructure, and build north-south transport corridors
between South Asian ports and Western China.17 A classic security dilemma is
beginning to take shape between India and China in the Indian Ocean.18
The Israel Question
New Delhis warming relationship with Israel since the early 1990s has been
welcomed by many in India as a shift towards pragmatism and a more balanced
approach to the Middle East.19 These ties, however, have also been constrained
by internal criticism in India that New Delhi is abandoning its traditional proArab policy.20 This debate says more about Indias domestic politics, especially
the Muslim question, rather than the broad contours of an Israel policy that are
now well established in New Delhi.21 The Left parties, which until recently were
important partners in the ruling coalition had exerted enormous pressure on the
Manmohan Singh government to cut-off Indias expansive security cooperation
with Israel. Thanks to the high stakes in this relationship, there was no way the
government could have obliged.
A number of propositions about Indias policy towards Israel might be summed
up here. First, despite many changes in the nature of Indias ruling coalitions since
the early 1990s, the policy towards Israel has remained reasonably constant. Indias
policy now is similar to those of the other major powers, all of whom maintain
reasonable relations with both Arabs and Israel. In many ways, it can now be
suggested that Indias Arab tilt since the late 1960s was an aberration rather than
a fundamental principle of Indias world view. Second, despite the new importance
of the ties with Israel, India has no reason to overlook its many enduring interests
in the Arab and Islamic world. A strong relationship with Israel is not a substitute
to deeper engagement with the rest of the Middle East. Even the Hindu nationalist
government of the BJP was not willing to claim the ties with Israel were more
important than those with the Arab world. While the BJP government did host
premier Ariel Sharon in 2003, it was not willing to reciprocate by sending either
62
the PM or the President to Israel. India knows the challenge now is about effective
balancing of the ties with Israel and the Arab world rather than one of choosing
sides. When Arab-Israeli relations are on the mend, it becomes a lot easier for India
to engage Israel. When they are tense, Indias freedom to cooperate with Israel
will be constrained. Third, Israel itself is looking towards a rapprochement with
Pakistan, an important non-Arab Islamic state. Pakistans security establishment,
concerned at Indias exclusive ties with Israel, has made repeated attempts in recent
years at building a new domestic consensus on forging ties with the Jewish state.22 If
and when Pakistan and Israel establish an overt relationship, the issue might cease
to be controversial in Indias domestic politics. Finally, the Arab-Israeli disputes
are no longer at the top of the operational concerns of Indian foreign policy. New
Delhi knows that in the near term, it is not in a position to influence the outcomes
in those conflicts one way or another despite some expectations in the region that
India could moderate Israels policies. What matters more to India is the Gulf,
where its interests are far deeper and at once are enduring and immediate.
Responding to the Changing Gulf Balance
While India has managed to construct a reasonable balance in its engagement

with the Arabs and Israel, it is likely to face difficult challenges in coping with the
rapidly altering balance of power in the Gulf amidst the intended and unintended
consequences of recent US policies in the region. 23 These include the empowerment
of the Shia-majority in Iraq, the intensification of Shia-Sunni dynamic, the Arab
fears of a Shia crescent led by Iran, the prospect of a permanent US military
presence in Iraq and its impact on extremism and terrorism. Meanwhile, either the
success or failure of the American mission in Iraq will have long-term consequences
for the stability of the Gulf. In the interim, the focus is now on the rise of Iran, the
prospect for a military confrontation between the United States and Iran, and the
elusive search for a regional security system.
Both Israel and Indias friends in Washington have been profoundly concerned
about the nature of New Delhis relations with Tehran. These concerns have been
strong enough to be injected into the US domestic legislation facilitating civilian
nuclear cooperation with India. This, in turn, has created a backlash in New Delhi and
compelled it to intensify its domestic posturing on the centrality of the relationship
with Tehran. This political rhetoric in both capitals, however, tends to overdetermine the current importance of Indo-Iranian ties.24 Indias interests in Iran
are straightforward. India considers Iran to be part of its inner perimeter of security
and the policy towards it is managed in conjunction with that towards Pakistan
63
and Afghanistan. Iran is also now an observer in the South Asian Association
of Regional Cooperation. The cultural links with Iran are deep, and Persian has
been one of Indias official languages for centuries. The British diplomatic legation
in Tehran through much of the 19th century was funded by and reported to the
Government of India. As the neighbor of both Pakistan and Afghanistan, Iran
directly impinges on Indias immediate security calculus. Iran is an important source
of oil and natural gas. Given Pakistans refusal to allow overland trade and transit,
Iran offers alternative geographic access to Afghanistan and Central Asia.
Despite the strategic significance of Iran, the recent history of bilateral relations
is a relatively dismal one. Shahs Iran was closer to Pakistan than India and a sort of
normalization of bilateral relations occurred only during the last days of the regime.
The revolutionary rhetoric of the Islamic Republic generated as much anxiety in New
Delhi as it did in other Arab capitals. While the Rafsanjani years saw an attempted
rapprochement, the political and security cooperation between New Delhi and
Tehran occurred only during the years of Taliban rule in Afghanistan, when the two
collaborated to support the Northern Alliance. The more recent period has seen a lot
of rhetoric on a strategic partnership, but very little real movement on the ground.
Given the problems with its own petroleum industry, Iran supplies less than a tenth
of Indias oil imports. The attempt to bring natural gas through an overland pipeline
is unlikely to be realized. More than American opposition, India has found Iran is
not an easy partner to negotiate with. Further there are issues about the international
certification of its natural gas resources, the pricing of the gas, Pakistans exaggerated
expectations on transit fees, and the security of the pipeline. Indias attempts to develop
transit corridors through Iran to Russia and Central Asia look good as lines on a map,
since Tehran is a long way from developing the culture of a trading nation. India has
few expatriates living in Iran. India has also expressed its opposition to Iranian nuclear
proliferation and voted twice against it at the International Atomic Energy Agency,
despite considerable internal opposition to such a move. There clearly is a tension
between Indias long-term geopolitical interest in a strong strategic partnership with
Iran and the short term difficulties of building such a relationship because of Tehrans
internal circumstances and external relations.25
There is also a question mark over Indias relationship with post-Saddam
Iraq. For decades, Baathist Iraq was one of Indias closest partners in the Gulf. Past
bilateral cooperation included privileged political, energy and military ties. Once
India decided in July 2003 not to send troops to Iraq, it has tended to withdraw
from a purposeful engagement with the new rulers of Iraq. If internal instability and
insecurity have been major deterrents, an Iraq that comes into its own is bound to
64
draw significant Indian effort to rebuild relations.26 Renewal of high level bilateral
contacts, the revitalization of the hydrocarbon sector in post-Saddam Iraq, and
Chinas search for oil contracts are all spurring India to take an active look at the
prospects for energy cooperation with Iraq.27
Meanwhile, the weight of the Arabian Peninsula has steadily expanded its
weight in Indias strategic calculus. It is, and is likely to remain, the single largest
source of energy imports for India. The GCC is among the top three trading partners
of India. Dubai, much like Singapore in the east, is emerging as an important
financial and commercial entrepot for India. The size of Indias expatriate labor
in the Arabian Peninsula is now close to five million. The GCC has chosen India
to be one of its partners for a strategic dialogue. Indias stepped up engagement
with the Gulf has included negotiations on a free trade agreement with the GCC,
longer term arrangements for energy security, cooperation in counter-terrorism,
and a tentative defense engagement including military exchanges and ship visits.28
Put simply, the depth and breadth of Indias relationship with the GCC states far
outweighs that with Iran.
There is a missing link, however, in Indias engagement with the Gulf. It is the
construction of a solid partnership with Saudi Arabia. For a host of reasons, India
has had a wary relationship with Saudi Arabia for decades. Part of it had to do with
Indias extreme sensitivity to the Gulf ties with Pakistan and a reaction to even token
statements on Kashmir from the Saudi Kingdom in the OIC. Recent years have
seen a purposeful effort at improving bilateral ties and developing them without a
reference to Pakistan. This problem is not unique to Indias relationship with Saudi
Arabia. It had been encountered in the engagement with Pakistans other major
allies, the United States and China. In both these relationships, India has managed
to reduce the salience of the Pakistan factor. King Abdullahs visit to India in January
2006, the first by a Saudi monarch in half a century, laid out a broad new framework
for a new partnership between the two countries.29 Calling India his second home,
the King sought to project a better balance in the Kingdoms relations with India
and Pakistan. Indias challenge is now to build on that framework. The improvement
in Indo-Pak relations during the last few years, the increased role of Saudi Arabia
in shaping the evolution of Pakistan and Afghanistan, and its potential contribution
to Indias energy security, have together created a new template for political and
security cooperation between New Delhi and Riyadh. Deepening this relationship
will open up new options for India to manage its own region as well as contribute to
stability in the Gulf. Instead of being overly anxious about Saudi-Pak relationship,
India can leverage its improving ties with both for its own long-term benefit.
65
Imparting a Strategic Content
India now has a range of policy initiatives to help it emerge as an important

player in the geopolitics of the Gulf and the Indian Ocean. The institutionalization
of the relations with the GCC, deepening commercial ties, expanding energy
partnerships, and a sustained political interaction at the highest levels have moved the
relationship to a new level. But they remain short of a genuine strategic partnership
of the kind India has begun to forge in East Asia over the last decade. Within a
decade of launching the Look East policy, India has become an integral part of the
East Asian regional institutions and its likely contribution to a new Asian security
architecture is very much part of an international debate. India has always seen itself
standing at the crossroads of Asia and has boasted about its historic ties to different
parts of Asia. To reclaim the centrality in the Indian Ocean theater that it enjoyed
during the years of the Raj, India needs to complement its Look East policy with a
Look West policy.30 The absence of region-wide institutions, the fragmented nature
of Indias Western neighborhood, and a more direct American involvement in the
management of regional volatility mean India cannot simply replicate its Look East
policy in the Gulf or the Greater Middle East. As the US itself rethinks its foreign
policy to the region after the tumultuous Bush years, as China begins to cast a
shadow over the region, and as the traditional balances between Arabia and Persia,
Shia and Sunni, and Saudi Arabia and Iran, are transformed, there is significant
scope for India to deepen political and security cooperation with the Gulf States.31
This would involve a sustained strategic dialogue with the Gulf security elites,
elevating the current defense exchanges to higher level, conduct of joint military
exercises, deeper links with regional navies, establishing military training programs,
servicing arrangements for military equipment, and eventual equipment transfers to
the region as India becomes part of the globalizing defense industry. This enhanced
security cooperation must be embedded in a strategic policy that supports the
integrity of the current territorial order in the region, actively contributes to the
maintenance of a stable regional balance of power, and encourages the evolution of
the Gulf towards political moderation and incremental modernization.
Endnotes:
1. For the notion of an India Center in the British imperial defense system, see Peter
John Brobst, The Future of the Great Game: Sir Olaf Caroe, Indias Independence and the
Defense of Asia (Akron: University of Akron Press, 2005).
2. David Scott, Indias Grand Strategy for the Indian Ocean: Mahanian Visions, Asia66

Pacific Review 13, no. 2, (November 2006): 97-129.
3. While some have sought to attribute the new realism in Indias foreign policy to
particular domestic formulation, the shift appears structural and not dependent on the
ideological orientation of the parties in India. See, Sreeram S. Chaulia, BJP, Indias
Foreign Policy and the Realist Alternative to the Nehruvian Tradition, International
Politics 39, no. 2 ( June 2002): 215-34.
4. Parag Khanna and C. Raja Mohan, Getting India Right, Policy Review (Stanford), no.
135, (February-March 2006): 43-61.
5. See C. Raja Mohan, Playing the Great Game: Indias Interventionist Future, India &
Global Affairs 1, no. 1, ( January-March 2008); see also Nitin Pai and Sushant K. Singh,
Deciding on the Use of Force, Mint (New Delhi), November 19, 2008, available at
<http://www.livemint.com/2008/11/19002154/Deciding-on-use-of-force.html
6. See for example, Subrata K. Mitra, Engaging the World: The Ambiguity of Indias
Power, in Indias New Dynamics in Foreign Policy eds. Subrata K. Mitra and Bernard
Rill (Munich: Hans Seidel Foundation, 2006), 7-33; Xenia Dormandy, Is India, or
Will it Be, a Responsible International Stakeholder? The Washington Quarterly 30, no.3
(Summer 2007): 99-115.
7. Thomas R. Metcalf, Imperial Connections: India in the Indian Ocean Arena, 1860-1920
(Berkeley, CA: California University Press, 2007); See also, Robert J. Blyth, The Empire of
the Raj: India, Eastern Africa and the Middle East (London: Palgrave Macmillan, 2003).
8. See for example, Narendra Singh Sarila, The Shadow of the Great Game: The Untold Story
of Indias Partition (New Delhi: Harper Collins, 2005).
9. See Olaf Caroe, Wells of Power: The Oil-fields of South-Western Asia (London: Macmillan,
1951).
10. Prithvi Ram Mudiam, India and the Middle East (London: I.B. Taurus, 1994); see also,
P. R. Kumaraswamy, Realism Replacing Rhetoric: Factors Shaping Indias Middle East
Policy, The Round Table 97, no. 397 (August 2008): 575-87.
11. For two contrasting views, see, C. Raja Mohan, Impossible Allies: Nuclear India, United
States and the Global Order (New Delhi: India Research Press, 2006); and Ninan Koshy,
Under the Empire: Indias New Foreign Policy (New Delhi: Leftword Books, 2006).
12. See for example, K.A., Kronstadt and Kenneth Katzman, India-Iran Relations and
U.S. Interests (Washington DC: Congressional Research Service, 2006); Christine C.
Fair, India and Iran: New Delhis Balancing Act, The Washington Quarterly 30, no. 3
(Summer 2007): 145-59.
13. Stephen J. Blank, Natural Allies? Regional Security in Asia and Prospects for Indo-American
Strategic Cooperation (Carlisle, PA: Strategic Studies Institute, US Army War College,
2005)
67
14. Ashley Tellis, India as a New Global Power: An Action Agenda for the United States
(Washington DC: Carnegie Endowment for International Peace, July 2005).
15. Andrew Erickson, The Growth of Chinas Navy: Implications for Indian Ocean
Security, Strategic Analysis (New Delhi) 32, no. 4 ( July 2008): 655-76; James R. Holmes
and Toshi Yoshihara, Chinas Naval Ambitions in the Indian Ocean, Strategic Studies
31, no.3 ( June 2008): 367-94.
16. Gurpreet S. Khurana, Chinas String of Pearls in the Indian Ocean and its Security
Implications, Strategic Analysis 32, no.1 ( January 2008): 1-39.
17. Marc Lanteigne, Chinas Maritime Security and the Malacca Dilemma, Asian Security
4, no.2 (2008): 143-61.
18. David Scott, The Great Power Great Game between India and China: The Logic of
Geography, Geopolitics, 13, no. 1 (2008): 1-26.
19. P.R. Kumaraswamy, India and Israel: Evolving Strategic Partnership ( Jerusalem: BeginSadat Center, 1998).
20. Harsh V. Pant, India-Israel Partnership: Convergence and Constraints, The Middle
East Review of International Affairs 8, no. 4 (December 2004), available at: http://meria.
idc.ac.il/journal/2004/issue4/jv8no4a6.html>
21. P.R. Kumaraswamy, The Muslim Factor in Indias Foreign Policy, Japan Times Online,
July 30, 2008, available at < http://search.japantimes.co.jp/cgi-bin/eo20080730a3.html>
22. P.R. Kumaraswamy, The Pakistani-Israeli Courtship, South Asian Survey 14, no. 1
(2007): 31-43.
23. For a broad overview, see Bansidhar Pradhan, Changing Dynamics of Indias West
Asia Policy, International Studies. 41 no. 1 ( January-March 2004): 1-88.
24. Harsh Pant, India-Iran Ties: Myth of a Strategic Partnership, February 11, 2008,
Center for Advanced Study of India, University of Pennsylvania, Philadelphia, available
at http://casi.ssc.upenn.edu/node/130; see also, C. Raja Mohan, The Charade on
Iran, The Indian Express (New Delhi), May 11, 2007.
25. For a balanced view, see Teresita Schaffer and Suzanne Fawzi, India and Iran: Limited
Partnership and High Stakes, South Asia Monitor (Washington DC: Center for
Strategic and International Studies), no. 114 (December 20): 2007.
26. Indrani Bagchi, India to Unshackle Iraq Policy, Times of India (New Delhi), December
7, 2004, 12.
27. Andrew E Kramer, Deals with Iraq are Set to Bring Oil Giants Back, New York Times,
June 19, 2008, available at <http://www.nytimes.com/2008/06/19/world/middleeast/
19iraq.html>
28. For a political description of the relationship, see the speech by the External Affairs
Minister Pranab Mukherjee, Indias Foreign Policy and India-Gulf Relations,
68

Emirates Centre for Strategic Studies and Research, May 12, 2008, available at <www.
mea.gov.in>
29. Prime Minister Manmohan Singh and King Abdullah bin Abdulaziz al Saud, The
Delhi Declaration, New Delhi, January 27, 2006, available at <www.mea.gov.in>
30. C. Raja Mohan, Indias Look-West Policy, The Hindu (New Delhi), June 17, 2004.
31. Samir Pradhan, Forging the India-Gulf Alliance, India & Global Affairs 1, no.4
(October-December 2008): 32-38.
69
About the Contributors
Abdulaziz O. Sager is Chairman and founder of the Gulf Research Center.

He is also President of Sager Group Holding in the Kingdom of Saudi Arabia
which is active in the fields of information technology, aviation services and
investments. In November 2003, Mr. Sager was appointed as a member of the
Makkah Province Council. In addition, he serves as a member on the advisory
board of the Arab Thought Foundation, Geneva Centre for the Democratic
Control of Armed Forces (DCAF) and on the advisory group for the 4th Arab
Human Development Report for the United Nations Development Programme
(UNDP). Mr. Sager has special research interest in Gulf strategic issues and is a
regular contributor and commentator to international and regional media. He also
regularly participates in regional and international forums and conferences held on
issues relevant to the Gulf region. Mr. Sager holds an M.A. degree in International
Relations from the University of Kent at Canterbury with the thesis The External
Factors Threatening Political Stability in the GCC States. He is currently working
on a research program entitled: Gulf Security, Dynamics, Perceptions and Policies,
1971-2003: A Comparative Study of the GCC States. His publications include
among others Energy Shapes New Gulf Security Architecture, in Journal of
Middle Eastern Geopolitics (2006); Political Opposition in Saudi Arabia in Saudi
Arabia in the Balance, Post-Iraq War; eds. Gerd Nonneman and Paul Aarts; Political
Reform Measures from a Domestic GCC Perspective, in Constitutional Reform
71
and Political Participation in the Gulf, eds. Abdulhadi Khalaf and Giacomo Luciani
(Dubai: Gulf Research Center, 2006); and Reforms in Saudi Arabia: Challenges and
Feasible Solutions (Gulf Research Center, 2003).
Geoffrey Kemp is Director of Regional Strategic Programs at The Nixon
Center in Washington D.C. He served in the White House during the first
Reagan administration as Special Assistant to the President for National Security
Affairs and Senior Director for Near East and South Asian Affairs on the National
Security Council Staff. He received his Ph.D. in political science at M.I.T. and
his M.A. and B.A. degrees from Oxford University. Prior to his current position
at The Nixon Center, Dr. Kemp was Director of the Middle East Arms Control
Project at the Carnegie Endowment for International Peace. In the 1970s he
worked at the Defense Department in the Policy Planning and Program Analysis
and Evaluation Offices, as well as for the Senate Committee on Foreign Relations.
He has written extensively on the Middle East and has recently completed a
manuscript on The East Moves West - India, China and the Growing Asian Presence
in the Middle East.
Harsh V. Pant teaches at Kings College London in the Department of
Defence Studies. He is also an Associate with the Kings Centre for Science and
Security and lectures at the UK Defence Academy. His current research is focused
on Asia-Pacific security and defence issues. He has published on these issues in
a number of academic journals and other publications. His latest books include
Contemporary Debates in Indian Foreign and Security Policy (Palgrave Macmillan,
2008) and Indian Foreign Policy in a Unipolar World (Routledge, 2008).
Samir Pradhan is Senior Researcher at the Gulf Research Center, Dubai.
He is involved with both the Economics and Gulf-Asia research programs and
is the editor of the Gulf-Asia Research Bulletin. He is a trained economist and
obtained his M.Phil and Ph.D. degrees in West Asian Studies from the School
of International Studies, Jawaharlal Nehru University, India. He is credited with
several peer-reviewed publications and has authored a book titled India, GCC and
the Global Energy Regime: Exploring Interdependence and Outlook for Collaboration
(New Delhi, Academic Foundation, 2008).
C. Raja Mohan is Professor of South Asian Studies at the S. Rajaratnam
School of International Studies, Nanyang Technological University, Singapore.
Earlier, Dr. Mohan was Professor of South Asian Studies at the Jawaharlal
Nehru University in New Delhi. He also served as the Strategic Affairs Editor
of the Indian Express in New Delhi and the Diplomatic Editor and Washington
Correspondent of The Hindu. Dr. Mohan has a Masters degree in Nuclear
72
About the Contributors
Physics and a Ph.D. in International Relations. He was a member of Indias

National Security Advisory Board during 1998-2000 and 2004-06. Dr.Mohan
was a Jennings Randolph Peace Fellow at the US Institute of Peace, Washington
D.C., during 1992-93. His recent books include Crossing the Rubicon: The Shaping
of Indias New Foreign Policy (New York: Palgrave, 2004) and Impossible Allies:
Nuclear India, United States and the Global Order (New Delhi: India Research
Press, 2006).
73
About The Nixon Center
President Richard Nixon announced the creation of The

Nixon Center on January 20, 1994, the 25th anniversary of his
first inauguration and just three months before his death in
April of that year. While genuinely non-partisan, as reflected
in the composition of its Board of Directors and Advisory
Council, the Center has a philosophy of an enlightened
pursuit of national interest. The specific goal of the Center is
to explore ways of enhancing American security and prosperity
while taking into account the legitimate perspectives of other
nations. The Centers objective is to develop guiding principles
for the United States global engagement in a dramatically new
international environment, principles which would combine
hard-headed pragmatism and fundamental American values.
The Nixon Center has five main programs:Chinese
Studies, Immigration and National Security, International
Security and Energy Programs, Regional Strategic Programs
(Middle East, Caspian Basin and South Asia) and US-Russia
Relations.In addition to conducting research into contemporary
foreign policy issues, Center program directors also organize
an array of conferences, briefings, seminars, lectures, and
other events designed to advance US foreign policy debates
on crucial political, economic, and security issues.These events
are frequently broadcast on C-SPAN and articles by Center
analysts appear regularly in major publications.
The Nixon Center also publishes the influential foreign
75
policy magazine, The National Interest, yet is committed to

having an impact beyond academic discussion. Its objectives
include not only the pragmatic analysis of contemporary
policy issues, but also broad public education and influence in
the national debate on American priorities in the post-Cold
War world and in the war on terrorism.
The Nixon Center 1615 L Street, NW
Washington, DC 20036
202.887.1000 (phone) 202.8875222 (fax)
http://www.nixoncenter.org/
76
GRC Publications
Books Published by GRC
Unfulfilled Potential:
Exploring the GCC-EU Relationship
Discovering the Arabian Gulf:
Canadas Evolving Ties with the
GCC States
Edited by
Christian Koch
ISBN 9948 424 30 1
Robert J. Bookmiller
ISBN 9948 432 18 5
Christian Koch & Felix

Neugart
ISBN 9948 424 73 5
Gulf Yearbook 2003
ISBN 9948 400 26 7
Gulf Yearbook 2004
ISBN 9948 400 93 3
Gulf Yearbook 2005 - 2006
ISBN 9948 432 22 3
Constitutional Reform and Political

Participation
ISBN 9948 432 53 3
Dynamic Alliances: Strengthening

ties between the GCC and Asia
ISBN 9948 432 81 9
Green Gulf Report
ISBN 9948 432 69 X
Mustafa Alani
ISBN 9948 432 61 4
Group of Authors
ISBN 9948 432 65 7
A Window of Opportunity Europe,

Gulf Security and the Aftermath of
the Iraq War
Gulf States: Counterterrorism - Laws

and Treaties
E-Learning in Social Sciences and
Humanities
Defense and Regional Security in

the Arabian Peninsula and Gulf
States, 1973-2004 (An Annotated
Bibliography)
J. E. Peterson
ISBN 9948 432 02 9
Youth and Environment Research
Group of Authors
ISBN 9948 432 67 3
Faryal Leghari
ISBN 9948 434 27 7
Edited by Eckart
Woertz
ISBN 9948 434 52 8
Samir Ranjan Pradhan
ISBN 9948 434 58 7
Faryal Leghari
ISBN 9948 434 74 9
ISBN 9948 434 29 3
ISBN 9948 434 71 4
EU-GCC Relations and Security

Issues Broadening the Horizon
Edited by
Christian koch
ISBN 9948 434 83 8
Fostering EU-Italy-GCC Cooperation:

The Political, Economic and Energy
Dimensions
Christian Koch
ISBN 9948 434 85 4
ISBN 9948 434 99 4
Narcotics and Human Trafficking in

the GCC States
Gulf Geo-Economics
Boom in the GCC Skies
Assessing Aviation Growth Patterns
Gulf-Pakistan: Strategic Relations
Research Papers
Peer-reviewed bilingual research papers and studies written by specialists in Gulf issues.
The research papers are comprehensive in character and meant to open the door for more
specialized Gulf studies.
GCC- EU Military and Economic
Relations
Elizabeth Stevens
ISBN 9948 400 30 5
Gregory Gause
ISBN 9948 400 36 4
Giacomo Luciani &

Tobias Schumacher
ISBN 9948 400 37 2
Political Reform in the Gulf

Cooperation Council States
Hasanain Tawfeeq
Ibrahi
ISBN 9948 424 95 6
Israels New Friendship Arch: India,

Russia and Turkey
P. R. Kumaraswamy
ISBN 9948 424 46 8
GCC- US Relations
GCC-EU Relations: Past Record and
Promises for the Future
Gulf Cooperation Council Relations

with the Commonwealth of
Independent States (CIS)
Marat Terterov
ISBN 9948 432 04 5
Political Participation and Stability in

the Sultanate of Oman
Joseph A. Kchichian
ISBN 9948 424 97 2
Elizabeth Stephens
ISBN 9948 400 30 5
Elena Suren
Melkumyan
ISBN 9948 424 63 8
Bogdan Szajkowski
ISBN 9948 424 77 8
Political Reform Measures from a

Domestic GCC Perspective
Abdulaziz Sager
ISBN 9948 424 55 7

with Australia
Patricia Berwick
ISBN 9948 400 55 0
Environmental Situational
Assessment for the GCC Countries
Frederic Launay
ISBN 9948 432 16 9
Education Policies in the GCC States
Salem Al-Khaldi
ISBN 9948 432 91 6
EU-GCC Relations and Security

Issues: Broadening the Horizon
Christian koch
ISBN 9948 434 83 8
Piracy: Motivation and Tactics

The Case of Somali Piracy
Nicole Stracke
Marie Bos
ISBN 9948 434 79 X
Gulf Cooperation Council and

the European Union Military and
Economic Relations
with Russia
Realignments within the Gulf
Cooperation Council
Policy papers
Analytical policy papers offering in-depth and well-researched exploration of public policies
in the GCC countries. <Policy Analysis> papers set forth perceptions likely to contribute to
a deeper understanding of these issues.
Reforms in Saudi Arabia
Abdulaziz Sager
ISBN 9948 400 24 0
Arab Peace Forces
Abdulaziz Sager
ISBN 9948 424 19 0
Political Kidnapping an Operational

Methodology
Mustafa Alani
ISBN 9948 424 03 4
Saddams Fate and Blunders of

Intelligence Speculations
Mustafa Alani
ISBN 9948 424 02 6
Gulf Cooperation Council States

Probable Attitude towards a Military
Action against Irans Nuclear Facilities
Mustafa Alani
ISBN 9948 400 99 2
Emilie Rutledge
ISBN 9948 424 22 0
Peter Jones
ISBN 9948 424 40 9
The Regional Roles of NATO and its

Potential Role in the Gulf Region
Musa Hamad Qallab
ISBN 9948 424 87 5
A Case for a GCC Political & Economic

Strategy Toward Post-War Iraq
Abdulaziz Sager
ISBN 9948 400 61 5
The Phenomenon of Blowing up

Iraqi Oil Pipelines: Conditions,
Motivations and Future Implications
Amar Ali Hassan
ISBN 9948 424 52 2
Combating Violence & Terrorism in

The Kingdom of Saudi Arabia
Abdulaziz Sager
ISBN 9948 400 01 1
Establishing a Successful GCC

Currency Union
A Gulf WMD Free Zone within
a Broader Gulf and Middle East
Security Architecture
Yemen Studies
A peer-reviewed bilingual series that includes academic studies and research on Yemeni
political, economic, social, defense and security affairs.
The Yemeni Parliamentary Elections
Ahmed
Abdul Kareem Saif
ISBN 9948 400 77 1
Gulf Papers
Present the findings of a series of workshops conducted by the Gulf Research Center within
the framework of the <Gulf Studies Program> individually or in cooperation with leading
peer research centers. Bringing together area specialists, each series of workshops tackles a
specific issue with the aim of reaching a common understanding on a specific issue in the
region and presenting a set of recommendations.
Dubai Emirate and Australian
Relationships
Patricia Berwick
ISBN 9948 400 85 2
Obstacles facing the Industrial

Establishments in Sohar Industrial
Estate, Oman
Adil Hassan Bakheet
ISBN 9948 400 85 2
Eckart Woertz
ISBN 9948 424 28 X
A Euro-Denominated Oil Bourse

in Iran: Potential Major Force in the
International System?
Robert E. Looney
ISBN 9948 432 83 5
Indian Labor Migration to the Gulf

Countries
Prakash C. Jain
ISBN 9948 432 85 1
GCC Stock Markets at Risk
Eckart Woertz
ISBN 9948 432 55 X
Gerd Nonneman
ISBN 9948 434 12 9
Rachele Gianfranchi
Rym Keramane
ISBN 9948 432 95 9
Roberto Aliboni
ISBN 9948 434 00 5
J. E. Peterson
ISBN 9948 434 18 8
The Role of Gold in the unified GCC

currency
EU-GCC Relations: Dynamics,

Patterns & Perspectives
Internet, Telecom Sector: Liberalization
and Civil Liberties in the Gulf Region
Europes Role in the Gulf:
A Transatlantic Perspective
The Arab Gulf States: Further Steps
towards Political Participation
EU-Gulf Political and Economic
Relations: Assessment and Policy
Recommendations
Abdullah Baabood
ISBN 9948 434 23 4
GCC Stock markets: Managing the Crisis
Eckart Woertz
ISBN 9948 434 33 1
Economic Instruments as an
Environmental Policy Tool: The Case
of GCC Countries
Mohamed A Raouf A
Hamid
ISBN 9948 434 61 7
Gulf Theses
The Center has catalogued a growing collection of MA and PhD theses beginning as early as
the mid-1970s to the present day. The GRC is also committed to publishing and translating
exceptional theses relevant to the Gulf.
Sea Change: Alan Villiers and the
Subversion of the Arabian Travel
Narrative
Grace Pundyk
ISBN 9948 424 97 2
Institutional Change in Saudi Arabia
Nicole Stracke
ISBN 9948 424 67 0
Iran and the GCC states: Prospects

for Long Term Regional Security in
the Gulf
Nicholas Stivang
ISBN 9948 434 04 8
Abdullah Baabood
ISBN 9948 424 69 7
EU-GCC Relations: A Study in

Inter-Regional Cooperation
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Indias Growing Role in the Gulf

Implications for the Region

Indias Growing Role in the Gulf

Gulf Research Center

The Nixon Center

Gulf Research Center

By publishing this volume, the Gulf Research

Gulf Research Center

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Looking Beyond Tehran: Indias Rising Stakes in the Gulf.................................. 41

Indias Strategic Challenges in the Indian Ocean and the Gulf............................

About the Contributors........................................................................................ 71

About The Nixon Center...................................................................................... 75

higher education in key Asian countries.

Gulf Research Center

Director, Regional Strategic Studies

Gulf Research Center

Indias Economic and Political Presence

Gulf Research Center

Indias Economic and Political Presence in the Gulf: A Gulf Perspective

Gulf and India: The Early Globalizers

The discovery of oil and manpower shortages in the Gulf precipitated

Gulf Research Center

Indias Economic and Political Presence in the Gulf: A Gulf Perspective

Source: Indian Embassies in the GCC, 2008.

Gulf Research Center

Indias Economic and Political Presence in the Gulf: A Gulf Perspective

United Arab Emirates

Rest of the World

The Indian business community is primarily engaged in trading, although there

Gulf Research Center

Indias Economic and Political Presence in the Gulf: A Gulf Perspective

Source: Reserve Bank of India, 2007

Indian Business Community and Companies in the Gulf

Gulf Research Center

Indias Economic and Political Presence in the Gulf: A Gulf Perspective

Patterns of Trade and Investment Flows

Figure 3: GCC-India non-Oil Trade, 1980-2007

Source: Calculated from IMF DOTS Database, 2008.

Gulf Research Center

Figure 4: GCC-India Trade, (Share and Value), 2007

Figure 5: Growth (Y-o-Y) of GCC Exports to and Imports from India

Source: Calculated from IMF DOTS Database, 2008.

Gulf Research Center

Indias Economic and Political Presence in the Gulf: A Gulf Perspective

Table 2: Indias Relevance as GCCs Trading Partner

Source: IMF DOTS, 2008

The GCC countries gained prominence in Indias foreign trade particularly

Petroleum gases and other gaseous

Top 10 Import Items

Petroleum oils and oils obtained from

Ferrous waste and scrap; remelting scrap

Transmission apparatus for radio-telephony,

Other tubes and pipes (for example, welded,

Source: International Trade Center Database, 2008.

Gulf Research Center

Indias Economic and Political Presence in the Gulf: A Gulf Perspective

Recent Policy Framework, Major Concerns and Outlook

Gulf Research Center

Indias Economic and Political Presence in the Gulf: A Gulf Perspective

will be specified in advance. Functions of the Committee shall be following up

Gulf Research Center