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Asia | A historic shift

India’s unprecedented love-in with the

Middle East
Amid a war Narendra Modi builds new Gulf ties

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Feb 14th 2024 | abu dhabi Save Share Give

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A s a flex of India’s newfound geopolitical muscle, it was hard to top. Visiting

the Middle East this week Narendra Modi stopped first in the United Arab
Emirates (uae), where he signed an investment treaty, headlined a rally of 40,000
Indian expatriates and opened a vast new Hindu temple. Then India’s prime
minister headed to nearby Qatar, having just secured the release of eight Indians
jailed there for espionage. All the while, a dozen Indian navy ships were in nearby
waters, helping to protect global shipping under threat from pirates and Houthi
missiles.
The trip, which began on February 13th, thus neatly entwined some of the key
strands—business, migration and security—of a historic shift in India’s approach
to the Middle East. Mr Modi is now injecting new momentum into arguably his
most important diplomatic initiative since taking office a decade ago:
downgrading relations with Iran and aligning India with Israel and the Gulf Arab
states

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The shift could pay huge dividends for all sides, boosting foreign investment to
India in particular. It could also help establish India as a competitor to China on
infrastructure and technology in the region. And it could add ballast to efforts by
America and its Gulf Arab partners to stabilise the Middle East. But there are
America and its Gulf Arab partners to stabilise the Middle East. But there are
risks too. And those have intensified in recent months as violence has spread from
Gaza into the Red Sea and beyond, threatening India’s investments and
expatriates, as well as its ships and cargo.
Mr Modi’s visit was, to some extent, about politics back home. With a general
election in India due by May, the rally in Abu Dhabi was part of a global effort to
mobilise overseas Indians, a big source of political funding. Opening the temple
there will further energise his Bharatiya Janata Party’s Hindu-nationalist base,
less than a month after he inaugurated one in northern India on the site of a
mosque demolished by Hindu extremists in 1992.
The visit also reinforced a campaign message that Mr Modi is bolstering India’s
global stature, including in the Islamic world. Indian expatriates say the results
are palpable in the uae, which he has visited seven times since 2015, when he
became India’s first prime minister to go there since 1981. “Respect for Indians
has really increased,” says Biswajit Ray, a 43-year-old Indian banker at the rally.
“We see it in our offices. We feel it walking on the street.”
But electioneering is only a tactical cherry on the strategic cake. Though India’s
links to the Middle East date back centuries, its diplomatic influence there waned
for decades after independence in 1947, largely because of Arab states’ support for
Pakistan. India’s ties to Iran and solidarity with the Palestinians also stymied
relations with Israel. Mr Modi now seeks to re-establish India as one of the
region’s essential players.

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Consider the economic picture first. India’s business links with the region used to
be defined by its imports of oil and exports of cheap labour. In the past few years,
however, bilateral trade has diversified, with the uae emerging as India’s second-
biggest export market. Last year the two countries signed a free-trade deal aimed
d bli il bil l d $ b b I di i l d
at doubling non-oil bilateral trade to $100bn by 2030. Indian commercial and
political ties with Iran, by contrast, have dwindled after India stopped importing
all Iranian oil in 2019 because of American sanctions.
At the same time, India has lured billions of dollars of investment from Gulf Arab
states keen for a stake in the world’s fastest-growing major economy. Emirati
investment flows into India totalled $9.8bn in the half-decade to 2023, almost
triple the figure for the previous five years. The uae’s largest sovereign-wealth
fund has committed itself to investing $75bn in Indian infrastructure. Saudi
Arabia’s has pledged $100bn.
Big Indian companies have also won infrastructure contracts in the region as
America presses Gulf Arab states to seek alternative partners to China. One of
them, Larsen & Toubro, says that some 30% of its $55bn order book stems from
the region, mainly Saudi Arabia. And Indian commerce with the uae is expected
to grow faster with the agreements Mr Modi just signed, including the bilateral
investment treaty, a deal to link the two countries’ digital-payment systems, and a
commitment to advance a plan backed by America and the eu to establish a trade
corridor linking India to Europe via the Middle East.
As business ties have grown, so too has the Indian diaspora in the Middle East.
There are now some 9m Indian nationals in the Gulf Co-operation Council
countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the uae), up from 7m
in 2013. The uae has about 3.5m, representing 36% of its population.
They are still mostly blue-collar workers. But in recent years many more wealthy
and middle-class Indians have been moving to the uae, especially Dubai. Some
migrated because of covid-19, which hit India hard. Many used the uae’s “golden
visas” which since 2019 have granted ten years’ residency to qualified
professionals, entrepreneurs and investors.
The influx also reflects the uae’s efforts to emphasise inclusivity. Hence the new
Hindu temple, which Mr Modi proposed in 2015. The uae’s president,
Muhammad bin Zayed, allocated 27 acres of land for it. At the Abu Dhabi rally,
Mr Modi hailed Sheikh Muhammad as his “brother” and thanked him for looking
after Indian expatriates. “We are partners in each other’s progress,” Mr Modi said,
pledging to elevate to new heights a relationship “based on talent, innovation and
culture”.
On the security front, the landscape has changed even faster. Israel has become
one of India’s top three weapons suppliers in recent years. Along with several
Gulf Arab states, it is an important Indian partner on counter-terrorism. And now
India is making a notable contribution to maritime security in the region, with its
biggest-ever naval deployment there. India’s navy has not joined the American
and British force in the Red Sea that has hit Houthi targets in Yemen. It is
focusing instead on piracy in the wider area, where it has investigated some 250
vessels, boarding 40. It is co-ordinating closely with America and Britain.

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Mr Modi’s pivot has suffered some setbacks. After breaking with Indian
precedent by voicing strong support for Israel following last year’s Hamas
attacks, his government had to adjust its position a few days later to reaffirm
support for a two-state solution. That followed intense criticism of Israel among
developing countries, including China, which India sees as its rival for leadership
of the “global south”. India may have to recalibrate again if Israel’s actions prompt
Gulf Arab states to harden their own positions.
India was also shocked in October when a Qatari court condemned to death eight
former Indian naval officers accused of spying for Israel. It is unclear how India
secured their release but last week it signed a $78bn deal to extend imports of
Qatari liquefied natural gas until 2048. There will no doubt be more challenges
ahead. But as India’s Middle Eastern interests expand, so does its appetite for
risk. “India is now playing a game in which you’ll get hurt sometimes, you’ll get
pushed around or you have to push other people around,” says C. Raja Mohan of
the National University of Singapore. “It’s part of joining the big boys’ club.” ■
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