Saudi Arabia’s Aramco and India’s Reliance Industries scrapped plans entailing a $15 billion Saudi investment in India’s Reliance Industries to acquire a 20% stake in Reliance due to the Indian oil shifting to the telecom conglomerate.
Reliance Industries justified the step by saying it came “due to evolving nature of Reliance’s business portfolio.” The Indian conglomerate also underscored plans to invest more than $10 billion to build four “Giga factories” that would produce solar cells and modules, energy storage batteries, and fuel cells.
The big picture
The Saudi oil giant and the Indian conglomerate signed a non-binding letter of intent in August 2019 for a 20% stake in Reliance’s oil-to-chemicals (O2C) unit. The unit itself is valued at around $75 billion, and Aramco’s share would have been worth $15 billion.
The deal came in light of the Indian-Saudi rapprochement, where the two countries’ interests happened to cross paths; India was looking for investments to support its economy, and Saudi saw India as a massive market for its oil output.
The two countries had economic temptations that had them too occupied to take other matters into consideration. And despite their friendly relations, which manifested in many meetings and pledges, relations between the two countries managed to grow cold.
Between the lines
Saudi foreign minister Faisal bin Farhan chose in September to announce that Kashmir was a disputed issue between India and Pakistan. Bin Farhan’s statement came on Indian soil, which sparked mixed reactions in the nation.
Prior to that, Saudi issued in October 2020 a 20 SAR bill that showed the map of India, and Kashmir was not included in India. That, in turn, caused India to object to the bill, prompting Saudi to withdraw the banknote from circulation.
UAE-Saudi competition
As part of bolstering business with India, Saudi established a strategic partnership council with India. Riyadh then launched a labor reform initiative to make changes to its sponsorship system that lays down rules and regulations for foreign worker mobility in Saudi Arabia, therefore facilitating the situation for Indian workers.
That last step was part of Saudi’s efforts to surpass the UAE on relations with India. And despite that, Abu Dhabi remained in the lead in terms of relations with New Delhi.
The UAE has double the amount of Indian workers as Saudi Arabia, and Abu Dhabi is New Delhi’s number-one trade partner in the Middle East. Both countries hope to double their non-oil trade over the five upcoming years, and the new Emirati commercial projects in India will enhance relations between the two countries.
Saudi, a country whose trade and economy rely on oil, cannot keep up with the UAE on India, and it seems that Riyadh will reach a point where it will admit to helplessness and perhaps even retreat.
Changes in the international arena
International policy has been changing since the US withdrew from Afghanistan, and all nations have been occupied with trying to play a new role in the international arena. In light of this turning point, the KSA and India have been looking forward to a post-US era.
Going back to the Saudi foreign minister’s visit to India, Saudi’s stance that seemed wavering sent a clear message: the old doctrine no longer worked in Saudi-Indian relations. New Delhi saw that when Riyadh delayed its 2019-announced $100 billion investment.
As one last indication, it seems that oil prices are a fine example from which one could deduce this change. In March, Indian petroleum and natural gas minister Dharmendra Pradhan described his Saudi counterpart’s advice to cut oil stocks to deal with rising crude oil prices as an “undiplomatic answer by some of our old friends. I politely disagree with that kind of approach.” Pradhan then said India would have to look for energy alternatives to Gulf oil.
What to watch
It is still too early to speak of a fundamental change in Saudi-Indian relations. However, with the changes afflicting the world order, it seems that it is time for nations to look for new allies and leave old ones behind.
Many countries are rethinking their reliance on the United States as China is gaining momentum as a center point for a new world order.
Where will India be situated? How will Saudi Arabia act? The repercussions of that on the relations between them is something worth following in the upcoming stage.
From almayadeen.net