Can BJP leaders' remarks on Prophet affect India's trade ties with Gulf?

India's relations with West Asian countries have been shaped by energy, trade

At a time when trade with countries in the Gulf is picking up after a brief let-up, controversial remarks made by the now-suspended Bharatiya Janata Party (BJP) leaders on Prophet Muhammad have stirred a debate on whether they could possibly affect India’s ongoing trade negotiations with nations in West Asia.

Saudi Arabia, Libya, the United Arab Emirates (UAE), Indonesia, Kuwait, Qatar, Bahrain, Iran, Yemen, Oman, among other Islamic nations, have censured the alleged Islamophobic remarks made by BJP spokesperson Nupur Sharma and Naveen Jindal last week during a television debate.

The Organisation of Islamic Cooperation — the collective voice of the Muslim world — has condemned the remarks.

Facing diplomatic backlash, the BJP has not only distanced itself from comments made by Sharma, calling her a ‘fringe element’, and Jindal, but also suspended them on Sunday.

India shares close ties with most countries in West Asia, especially the Gulf Cooperation Council (GCC). Some of these nations are India’s biggest export market.

GCC is a regional, intergovernmental political economic union comprising six countries — Bahrain, Kuwait, Oman, Qatar, the UAE, and Saudi Arabia. Region wise, it is the fourth-largest trading partner for India, following North America, European Union, and Northeast Asia.

Most importantly, India is dependent on these countries to meet its energy needs. Of the total imports from West Asia, nearly two-thirds comprise petroleum products.

As far as India’s overall import basket is concerned, petroleum products have a share hovering over 30 per cent. For instance, a fifth of the total crude oil imports is met by Iraq, followed by Saudi Arabia and the UAE at 18 and 10 per cent, respectively.

The UAE was also India’s second-largest export and import market in 2021-22 (FY22). Similarly, Saudi Arabia was India’s fourth-largest trading and import partner in the last fiscal year.

In February, India and the UAE signed a Comprehensive Economic Partnership Agreement (CEPA). The trade pact was implemented last month.

India and Oman have also agreed to undertake a joint feasibility study, before going ahead with a preferential trade deal on limited goods.

Similarly, India is set to begin deeper engagements with GCC countries to finalise a free trade agreement with the group of nations.

India’s exports to the six GCC nations stood at $43.93 billion in FY22, up 58.3 per cent on-year, while imports stood at $110.72 billion, up nearly 86 per cent on-year.

The share of exports was 10.4 per cent, compared to the total exports, while that of imports stood at 18 per cent in 2020-21.

Petroleum products, precious and semi-precious stones, and plastics are the top imported items from the GCC.

Cereals, electrical equipment, apparel, and machinery are the top exported items in the region.

Biswajit Dhar, Jawaharlal Nehru University Professor said that the Gulf is an important region for India in terms of economic ties.

“UAE is the second largest export destination for India. India also meets its crude oil requirements from the Gulf region. After the UAE CEPA, there has been talks of a trade deal with the Gulf Cooperation Council. Apart from that lot of Indian exports that go to UAE are reexported to Africa and other countries. That’s why it is an important hub for Indian exports,” Dhar said.

Trade relations

• Some GCC countries form India’s biggest export market
• India dependent to meet its energy needs
• UAE was India’s second-largest export and import market in FY22
• Saudi Arabia was India’s fourth- largest trading and import partner
• In February, India and the UAE signed a Comprehensive Economic Partnership Agreement
• India, Oman have also agreed to undertake a joint feasibility study