India Offers Big Investment Opportunities

JEDDAH, 26 June 2007 — What will be the impact of Saudi Arabia’s “Look East Policy” on Indo-Saudi ties? That was the question to Indian Consul General Dr. Ausaf Sayeed by Minaret Business Organization (MBO), a nonprofit organization, at a select meeting of Saudi Chief Executive Officers (CEOs) at the Jeddah Hilton on Sunday. The CEOs showed keen interest and asked a number of questions concerning India’s investment climate.

After the visit to India by Custodian of the Two Holy Mosques King Abdullah last year, “Indo-Saudi ties have assumed greater significance,” said Sayeed. He said India ranked fourth in Saudi Arabia’s top 10 destinations for exports in 2005 with India importing goods worth SR40.24 billion after the United States, Japan and South Korea. “China, Japan, South Korea and India are the biggest consumers of oil in Asia with the Kingdom meeting 26 percent of India’s oil requirements compared to Japan’s 25 percent and China’s 14 percent,” he said.

There is great scope for the Kingdom to export more oil to Asia as it expands its role in the global economy. “Asia will have 70 percent of incremental global demand growth in oil so strong partnerships can be build between major oil producers such as Saudi Arabia and major oil consumers such as Asian countries.”

According to the International Energy Agency’s projections, China’s oil demand will reach 14.2 million bpd by 2025 from the current level of 7 mbpd. Likewise, India’s oil demand is expected to rise from 2.83 mbpd in 2006 to 5.5 mbpd by 2025.

“By 2010,” Sayeed said, “India is projected to emerge as the fourth largest consumer of energy after the US, China and Japan.”

With oil revenues making up around 95 percent of total Saudi export earnings, more than 80 percent of state revenues, and at more than 40 percent of the country’s GDP (gross domestic product), Sayeed said, “Saudi Arabia’s economy remains, despite attempts at diversification, heavily dependent on oil.” Underlining growing India-GCC ties, Sayeed said, the GCC is India’s second largest trading partner with bilateral trade exceeding $18 billion-$20 billion. About 70 percent of India’s net oil requirements come from the GCC.

Two-way trade between India and Saudi Arabia exceeded $9.87 billion in 2005-06. Around 3.7 million Indian nationals live in the six GCC countries and send home about $8 billion annually. More than 1.5 million Indians are employed in Saudi Arabia.

Sayeed said during King Abdullah’s visit the Delhi Declaration was signed and the agreement set the standard for long-standing ties between the two countries. Both India and the Kingdom will develop “strategic energy partnership.” India will assist Saudi Arabia in setting up an ICT center of excellence. India also offered Saudi students facilities for higher studies. There were agreements on avoidance of double Taxation, bilateral investment promotion and protection, MOU for cooperation in the health sector and joint business council.

For Saudi Arabia, India is the fifth largest market for its exports and 9th biggest source for its imports and for India the Kingdom is the 15th largest market for exports.

India is the 6th biggest investor in Saudi Arabia with investments totaling $1.2 billion compared to $250 million just three years ago. There are 157 Indian projects in Saudi Arabia with major companies involved being Wipro Ltd., Satyam Computer, TCIL Saudi Co. Ltd., Tata Consultancy and Tata Motors and Larsen and Toubro etc.

Sayeed said there were 49 Saudi projects working in India and another 50 had been approved.

In recent years, Indian companies got licenses to invest another $1 billion spread over about 200 projects.

India’s stock markets offer great potential for investment, he said.

Sayeed said there was a good opportunity for foreign investors in India as its GDP is likely to exceed $1 trillion and 9.4 percent growth rate this year there are potential areas where investments are projected to reach by 2012 at $143 billion in power generation, transmission and distribution $116 billion, roads $40 billion, coal $26 billion, ports $20 billion, refineries $22 billion, oil & gas $100 billion and railways $15 billion.

Sayeed admitted that India had failed to attract more tourists compared to some other countries due to the lack of proper marketing of the sector abroad. About 4 million tourists visited India in 2006.