India and the Middle East (Indo–Middle East)

India’s engagement with the Middle East is no longer limited to energy imports – it has evolved into a multidimensional partnership encompassing trade, strategic ties, defence cooperation, and cultural diplomacy.

Why is the Middle East important for India?

Energy Security and Economic Stability:

• India’s crude oil import from the Middle East increased from 51% (December 2024) to 53.89% in January 2025, making it indispensable for sustaining economic growth.
• In January 2023, India and UAE signed an MoU to cooperate on green hydrogen development and undersea cable projects under the “One Sun, One World, One Grid (OSOWOG)” initiative.

One Sun, One World, One Grid (OSOWOG)

• It is an international solar energy initiative proposed by India.
• First introduced by Prime Minister Narendra Modi in 2018 during the International Solar Alliance (ISA).

🎯 Key Objectives:

• Establish a globally interconnected solar energy grid.
• Utilize solar power across different time zones – based on the principle: “The Sun Never Sets.”
• Ensure access to clean, affordable, and sustainable energy worldwide.

🌐 Core Principle:

“The Sun Never Sets” – solar energy is always available somewhere in the world.

⚙️ Three Phases:

1. Phase 1: Grid interconnection between the Middle East – South Asia – Southeast Asia.
2. Phase 2: Connecting the Asian grid with Africa.
3. Phase 3: Global interconnection linking all continents.

🔗 Key Stakeholders:

• ISA (International Solar Alliance)
• World Bank
• Government of India (Ministry of New and Renewable Energy – MNRE)

✅ Benefits:

• Maximized use of renewable energy.
• Reduced greenhouse gas emissions.
• Decline in energy costs.
• Strengthened global energy security.

⚠️ Challenges:

• Technological and geographical diversity.
• Political will and international cooperation.
• Cybersecurity and grid stability.

Trade, Investment, and Economic Corridors:

• During FY 2023-24, India-GCC bilateral trade stood at USD 161.59 billion, with the Middle East as a major partner.

Gulf Cooperation Council (GCC):

• Established: 25 May 1981
• Headquarters: Riyadh, Saudi Arabia
• Type: Political and economic cooperation organization

Member States:

1. Saudi Arabia
2. United Arab Emirates (UAE)
3. Kuwait
4. Bahrain
5. Oman
6. Qatar

🎯 Objectives:

• Promote economic, political, and social cooperation.
• Develop shared security and defence strategies.
• Move toward a common currency and integrated market.
• Preserve culture and Islamic heritage.

🏛️ Structure:

1. GCC Summit – Apex policy-making body.
2. Ministerial Council – Policy implementation.
3. Secretariat – Administrative operations (HQ: Riyadh)

🤝 India-GCC Relations:

🔹 Trade:

• GCC is India’s largest trading bloc (₹150+ billion in 2023-24).
• Major Imports: Crude oil, gas
• Major Exports: Food products, machinery, chemicals

🔹 NRIs (Non-Resident Indians):

• Nearly 9 million Indians reside in the GCC region.
• Significant remittances strengthen India’s foreign reserves and economic stability.

🔹 Strategic Ties:

• Energy security
• Counter-terrorism cooperation
• Maritime security (naval exercises in the Gulf)

🛡️ GCC’s Security Role:

• “Peninsula Shield Force” – Joint military force
• Balancing strategy with Iran
• Involvement in regional issues like Yemen War, Qatar Crisis

⚠️ Challenges:

• Internal tensions: Qatar crisis (2017), Saudi-Iran rivalry
• Oil dependence and need for diversification
• Sensitivity around India-Iran relations

📝 Potential UPSC Prelims Question:

Q. Which of the following is NOT a member of the GCC?
(a) Kuwait
(b) Qatar
(c) Iraq
(d) Bahrain
✅ Answer: (c) Iraq

India-Middle East-Europe Economic Corridor (IMEC)

• Aims to strengthen supply chains and reduce trade costs.

🔷 Introduction:

• Announced: 9-10 September 2023, G20 Summit (New Delhi)
• Proposed by: India, USA, Saudi Arabia, UAE, European Union, France, Germany, Italy
• Objective: Create an alternative trade route from Asia to Europe

🌍 Corridor Structure:

Two Major Segments:

1. Eastern Corridor:
   • India → Gulf countries (UAE, Saudi Arabia)
   • Uses sea, rail, and road networks
2. Northern Corridor:
   • Saudi Arabia → Europe (e.g., Greece, Italy, France)
   • Rail and port connectivity

📦 Objectives and Significance:

• Geographical connectivity: India → Gulf → Europe
• Reduced trade time and cost
• Secure supply chains for energy, food, and data
• Alternative to China’s Belt and Road Initiative (BRI)
• Promote green infrastructure (green transition)

🤝 Participating Nations:

• India
• USA
• UAE
• Saudi Arabia
• European Union
• France, Germany, Italy

🛣️ Key Features:

• Multimodal transport (sea, rail, road)
• High-speed data cables, energy pipelines, hydrogen corridor
• Streamlined logistics and customs processes

📊 Benefits for India:

• Faster, cheaper trade route to Europe
• Strategic collaboration with the Middle East
• Infrastructure development in Indian ports and railways
• Enhanced international leadership (leading the Global South)

⚠️ Challenges:

• Geopolitical tensions: Iran-Israel, Yemen war
• Long-term financial commitments
• Impact of existing BRI network
• Security risks like Houthi attacks

🔍 Potential UPSC Prelims Question:

Q. Which of the following countries is NOT a member of the India-Middle East-Europe Economic Corridor (IMEC)?
(a) India
(b) China
(c) Saudi Arabia
(d) Italy
✅ Answer: (b) China

Other Key Points:

• UAE is India’s third-largest trading partner and second-largest export destination.
• Remittances and Workforce Contribution: Millions of Indian migrants in the Middle East significantly contribute to India’s foreign exchange reserves and economic stability.
• Over 66% of India’s 13.4 million NRIs live in UAE, Saudi Arabia, Kuwait, Qatar, Oman, and Bahrain.

Geopolitical and Strategic Cooperation:

• Amid rising regional tensions (e.g., Saudi-Iran, Israel-Arab rivalries), India’s balanced diplomacy helps maintain strategic autonomy.
• Defence ties are growing, with India participating in joint military exercises and securing defence exports.
• Example: In 2021, India and Saudi Arabia launched their first joint naval exercise – Al-Mohed Al-Hindi.

Chabahar Port Deal with Iran:

• Bypasses Pakistan and enhances connectivity with Central Asia.

Food and Maritime Security:

• India depends on the Middle East for food exports – major buyers of Indian rice, wheat, and eggs.
• India also exports rice, textiles, garments, machinery, grains, automobiles, and gems & jewelry to Saudi Arabia.

Cultural, Religious, and Soft Power Diplomacy:

• Shared heritage, Sufi traditions, and the Indian diaspora strengthen ties.
• Religious importance for Indian Muslims (Hajj, Umrah) deepens bilateral ties.
• Bollywood, Yoga, and Ayurveda enhance India’s cultural influence in Gulf countries.

Key Issues in Indo-Middle East Relations:

⚠️ Volatility in Energy Prices and Supply Disruptions:

• Heavy reliance on Middle Eastern oil and gas makes India vulnerable to price fluctuations and geopolitical crises.
• Rising tensions like Houthi attacks in the Red Sea (2023-24) and OPEC+ production cuts have disrupted supply chains and increased import costs.

Example:

• Several OPEC+ nations voluntarily agreed to cut oil production by 2.2 million barrels per day in Q1 2024, increasing global oil prices and impacting India’s energy costs.

⚠️ Geopolitical Instability and Regional Conflicts:

• Ongoing conflicts (Israel-Palestine, Yemen, Iran-Saudi Arabia) pose diplomatic challenges.
• Balancing neutrality in the Israel-Gaza conflict while maintaining ties with both Iran and Saudi Arabia is critical.
• Regional unrest affects Indian trade, diaspora (e.g., Operation Ajay to evacuate 18,000 Indians from Israel), and energy security.

⚠️ Trade Barriers and Delayed Economic Agreements:

• Despite strong trade, the absence of a Free Trade Agreement (FTA) with the GCC limits full economic potential.
• Regulatory issues, tariff barriers, and labor laws obstruct trade expansion.
• Though CEPA (2022) with UAE boosted trade, India-GCC FTA has seen slow progress due to regional complexities.

⚠️ Maritime Security and Threats to Trade Routes:

• Red Sea, Persian Gulf, and Arabian Sea are crucial for Indian trade, yet face piracy and geopolitical threats.
• Attacks on commercial vessels raise shipping costs, delay cargo movement, and threaten India’s Sea Lines of Communication (SLOC).
• Indian Navy has increased patrols, but instability continues.
• Example: Houthi attacks (2023-24) forced shipping companies to reroute, disrupting Indian trade and impacting oil imports (65% via Suez Canal).

⚠️ Labor Rights and Migration Issues:

• Indian workers in the Middle East face issues like job losses, delayed salaries, and labor exploitation.
• While Gulf countries are reforming labor laws (e.g., Saudi Nitaqat policy), challenges persist.

What is the Nitaqat Policy?

• Introduced by the Saudi government in 2011, it is a “Saudization” policy aimed at providing employment to local Saudi citizens in the private sector.

Impact on India:

🧑‍🏭 Effect on Migrant Workers:

• Over 2 million Indians work in Saudi Arabia.
• Due to Nitaqat, thousands of Indians (especially in informal sectors) had to return.
• Many migrants started working informally, risking safety and rights.

📉 Impact on Foreign Exchange:

• Temporary dip in remittances affected India’s forex reserves.
• Particularly impacted migrant-sending states like Kerala, Andhra Pradesh, and Bihar.

🌍 Trend Among GCC Countries:

• Other GCC nations (UAE – Emiratisation, Kuwait, Oman, Bahrain) are also adopting similar localization policies.
• As a result, India is exploring alternative labor markets (e.g., Europe, East Asia).

⚔️ Strategic Rivalries and External Influence:

• China’s growing presence in the Middle East through Belt and Road Initiative (BRI) investments and defence ties challenges India’s influence.
• Example: In March 2023, China brokered diplomatic ties between Iran and Saudi Arabia, showcasing its diplomatic strength and complicating India’s regional strategy.

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