India's interests and capabilities extend well beyond the sub-continent. This essay is part of a series that explores the geopolitical dimensions, economic ties, transnational networks, and other aspects of India's links with the Middle East (West Asia) -- a region that plays a vital role in India's economy and its future. More ...
The discourse of Non Alignment continues to shape the political culture of the Indian establishment’s strategic thinking in the field of foreign policy, notwithstanding the decline of Gandhian-Nehruvian moralism and increasing adaptation to the culture of power-centered realism in recent years. Gradualism and risk avoidance remain deeply embedded features of India’s conduct of external relations, including its relations with West Asia, lately referred to as India’s “extended neighborhood.”
Indian Engagement in West Asia Pre- and Post-1991
Indian foreign policy engagement in West Asia can be divided into two distinct phases, pre- and post-1991. Prior to 1991 India’s engagement with the region was one of “political distance,” save the heydays of Nasserism, on account of the dynamics of Cold War politics and the fact that India purchased the bulk of its hydrocarbons needs (15-25 percent) from Russia and had nothing substantial to offer to the Arab world: trade, goods, services, technology, or economic assistance. India’s relationship with Israel was frozen due to its pro-Arab and pro-Palestine position.
India’s engagement with the region began to increase and solidify in the early 1990s due to a multitude of factors: the end of the Cold War, the disintegration of Soviet Union, and India’s growing demand for oil and gas due to its accelerated economic development and propensity to acquire great power status fuelled by aggressive economic and political nationalism. This set of objectives drew India closer to the United Arab Emirates (U.A.E.), the Kingdom of Saudi Arabia, the Islamic Republic of Iran, and Israel — the very same countries around which Indian foreign policy in the region revolves today. Gradually, these countries, along with the United States, have become crucial in realizing India’s great power aspirations, as evidenced by the increasing frequency of visits of Indian leaders to these destinations — visits reciprocated by their counterparts.
Thus, Saudi Arabia not only offset the loss of supply of hydrocarbon products from the erstwhile Soviet Union but also met the Indian market’s increasing demand. In fact, Saudi Arabia gradually emerged as India’s top supplier of crude oil (20 percent) until 2015, when it was marginally overtaken by Nigeria, as well as an important source of remittances ($8 billion). Israel quickly made inroads into the Indian defense sector, initially as a supplier of spare parts for the mostly Soviet-made Indian defense-related products and later as the third-largest arms supplier (after Russia and the U.S.) to the Indian defense industry. Furthermore, within the Indian strategic community, Israel is increasingly regarded not just as a “strategic defense partner” but as a “model of counter-terrorism” whose lessons and experiences could be applied to the fight against cross-border terrorism in Kashmir.
Iran, too, occupies an important position in India’s strategic thinking, and for several reasons. First, Iran is a significant source of crude oil, accounting for 6 percent of India’s oil imports in 2015. Second, Iran borders the Strait of Hormuz through which a fifth of the world’s seaborne oil passes. Third, Iran is poised to become India’s “gateway” to Central Asia, Europe and Russia as a result of the future construction of the ports at Chabahar and Bandar Abbas and the International North-South Transport Corridor (INSTC). Fourth, Iran is a valuable ally in the fight against the Taliban in Afghanistan. Finally, Iran is an emerging regional power with wide-ranging influence in West Asia that could contribute to regional stability. It is for these reasons that India worked assiduously to sustain its relationship with Iran in the face of pressure by the U.S., Israel, and the G.C.C. countries regarding the Iranian nuclear program.
However, it is the G.C.C. countries, particularly in the aftermath of the September 11, 2001 terrorist attacks, which have come to occupy an increasingly important “political space” in Indian strategic thinking. The Gulf Arab states provide 50 percent of Indian crude oil and 85 percent of its natural gas requirements. Collectively, the G.C.C. countries have emerged as India’s largest trade partner. Bilateral trade with the G.C.C. countries reached $150 billion in 2016; trade with the U.A.E. and Saudi Arabia accounted for $60 billion and $39 billion, respectively. In addition, the 7-8 million Indian expatriate workers in the G.C.C. countries generate more than $30 billion in remittances. India is also seeking to tap the G.C.C. countries’ sovereign wealth funds (SWFs) for its domestic investment and infrastructural development.
Meanwhile, the combination of several developments has spurred Gulf countries to look to the East, principally to China and India, to enhance their security, attract investment, and export hydrocarbon products: the post-9/11 “trust deficit” and concern among the Gulf governments regarding the safety of their investments in the West; the development of shale oil in the United States and the latter’s steadily declining oil and gas imports from the Gulf; the U.S.’s diminishing political influence in the region; and the rising economies of Asia. India, therefore, sees a strong convergence of interest with the Gulf Arab countries. “Food-energy security” is one of several additional areas of convergence between India and G.C.C. countries, given the fact that G.C.C. countries import 80 percent of their rice and 60 percent of other food commodities from India.
Indian Strategy Towards West Asia
Ensuring the stability and security of the Persian Gulf region, including the protection of the large Indian expatriate community in the context of persistent conflict and violence across the region, has emerged as the top priority of Indian foreign policy toward West Asia in recent years. It is important to note here that high oil prices in the early 1990s, the cost of evacuation of the more than 100,000 Indian workers following Iraq’s invasion of Kuwait in 1990, and the consequent drastic fall in remittances were the three principal reasons that caused Indian foreign reserves to plummet, forcing the political leadership to mortgage the country’s gold, approach the International Monetary Fund (IMF) for loans, and embark on liberal economic reform.
The high degree of political unpredictability and deteriorating security environment in the region, along with the growing possibility of the reduction if not withdrawal of the American security role in the region, has led India to follow two simultaneous, though not necessarily contradictory, paths in conducting its relations with West Asia. One path is marked by the continuation of India’s traditional diplomatic line of “non-interference” in the internal affairs of its counterparts in the region, coupled with a “wait and watch” posture that is punctuated by condemnations of terrorism and sectarian violence, and appeals to regional stakeholders to pursue negotiated settlements of disputes.
The other path is marked by the deepening of India’s security ties with its Gulf Arab partners, including in the area of counterterrorism, along with exploring the possibility of an alternative multilateral Asian security framework for the Gulf involving important stakeholders such as China, Japan, and South Korea. This latter approach has led the Indian government to invest in overseas oil and gas fields (i.e., mainly in Sudan, Syria, Iran, Egypt, Saudi Arabia, and Russia), to undertake a massive modernization of the Indian navy, including development of a maritime doctrine with a view to protect sea lines of communication (SLOCs) in the Indian Ocean as well as to prevent China from dominating the Indian Ocean; to conduct joint naval exercises with the U.S., U.K., France, China, and Gulf countries; and to conclude a series of bilateral defense and strategic agreements with all of the G.C.C. states. In addition, under the Modi government, India’s counterterrorism policy has been expanded in an effort to isolate and expose Pakistan’s policy of terrorism globally, including in West Asia. Saudi Arabia and the U.A.E. have responded positively to the Indian authorities’ request for the extradition of suspected terrorists.
Limitations of the Indian Vision and Strategy for West Asia
How effective is India’s strategy towards West Asia? Have growing economic ties and security cooperation between India and the regional countries resulted in a transformation of political relations? Has the relationship between India and any of its Gulf counterparts evolved into a strategic alliance? Probably not, though there has been a definite upswing in all of these relationships. Nevertheless, there are serious domestic and external limitations that constrain the further development of relations between India and West Asia.
On the domestic front, the bureaucratic mode of running Indian foreign policy, chronic understaffing, and multiple centers of decision making has often resulted in inefficient or inadequate implementation of bilateral and international treaties and agreements. There are numerous examples of such problems, including the 2008 India-United States Civil Nuclear Agreement (123 Agreement), where the enactment by the Indian parliament of the Nuclear Suppliers Liability Law has stalled progress in civilian nuclear energy cooperation.
Second, despite India’s growing stature in the Gulf, it has not been able to attract substantial Arab investment. Foreign direct investment (FDI) from the G.C.C. countries between 2000 and 2014 has remained stagnant, at $3.2 billion; the total investment by the U.A.E. during that period was a meager $8 billion. This is partly due to the Indian government’s reluctance to establish an Islamic Bank but also attributable to Arab investors’ lack of confidence in securing rapid returns on their investments in view of archaic banking rules and regulations, corruption, and lack of transparency.
Externally, India faces three kinds of challenges. First, the creation of Pakistan permanently deprived India of its “geopolitical reach” to Central and West Asia. This fact of geography and India’s “trust deficit” with Pakistan has incapacitated India from advancing its commercial interests, including the bringing to fruition of the Iran-India-Pakistan (IPI) and Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline projects. Moreover, Pakistan continues to have a strong political constituency across Muslim West Asia — nurtured by its Islamic identity, image of victimhood, and military-security ties — which tilts the balance of political support in the region in its favor vis-a-vis India. Furthermore, India lacks an effective media strategy to counter Pakistan’s narrative on the Partition of the subcontinent and Kashmir, leaving Delhi with little alternative but to engage “constructively” with Pakistan both to promote bilateral relations and to ensure an effective outreach to West and Central Asia.
A second external challenge to India’s foreign policy in West Asia comes from China. Though India is a strong advocate of multilateral Asian security cooperation, including China, in the Gulf sub-region, this is unlikely to materialize for two reasons. First, accustomed to life under a U.S. hegemonic security system, Gulf Arab leaders do not appear to find the idea of a collective security system very appealing. Second, the internal contradiction and trust deficit that exists among India, China, and Japan precludes effective cooperation in this direction despite the convergence of interest. To be sure, India holds an edge over China in terms of its “soft power” in the region, and is increasingly viewed by Gulf countries as a security partner. However, China has acquired immense global influence and prestige. There is a huge power disparity between China and India in terms of hard cash and military prowess. And China has already made rapid inroads in the Gulf by virtue of having acquired equity stakes in the region’s upstream oil and gas sector, and having successfully penetrated Arab markets. Finally, India’s incapacity to manage its own periphery, South Asia, has arguably made Gulf Arabs more inclined to seek Chinese, rather than Indian protection, if the situation so warrants.
The third challenge India faces comes from within the region itself. Though Indian democracy has thus far insulated the Indian Muslims from the adverse impact of Saudi-Wahhabi-centered global Islamic radicalism, including ISIL, the future looks bleak in view of growing alienation among Muslims from the Indian state system, more so in the context of rising Hindu nationalism. India lacks a long-term vision to arrest the worrying menace of Saudi Wahhabism, the rapid spread of which has created havoc in Pakistan. Second, the decline of oil and gas prices, along with the rising cost of “war conditions” has led to the slowing of Arab Gulf economies, resulting in salary cuts, layoffs, tax levies, contracting employment opportunities, and the nationalization of workforces at the cost of the expatriate community. The Indian government has yet to develop a policy framework to deal with such future contingencies.
The ambiguity and fuzziness of Indian foreign policy, along with its structural limitations, continue to produce a paradoxical situation: expanding economic and defense ties but without political-strategic depth between India and West Asia. This is a situation that, in the long run, does not auger well for India, which aspires for great power status and whose future growth is increasingly intertwined with the security of the Gulf.
 Sunil Khilnani et al., NonAlignment 2.0: A Foreign and Strategic Policy for India in the Twenty First Century (New Delhi: Centre for Policy Research, 2012).
 U.S. Energy Information Administration, Country Analysis Brief: India (June 14, 2016) 10, accessed February 5, 2017, http://www.ieee.es/Galerias/fichero/OtrasPublicaciones/Internacional/20….
 For details see, Nicolas Blarel, “Indo- Israel Relations: Emergence of Strategic Relationship,” in Sumit Gangualy, Ed., India’s Foreign Policy: Retrospect and Prospect (Oxford, UK: Oxford University Press, 2010): 132-155.
 U.S. Energy Information Administration, Country Analysis Brief: India, 10.
 India voted against Iran in 2005, 2006, 2009, and 2011 for failing to comply with its NPT obligations. It imported 21.20 million tonnes of crude oil from Iran in 2009-10, which was reduced to 18.50 million tones in 2010-11, 18.11 million tones in 2011-12 and 13.14 million tonnes in 2012-13.
 Government of India, Ministry of External Affairs, Annual Report: 2014-2015, 58, accessed February 5, 2017, http://www.mea.gov.in/Uploads/PublicationDocs/26525_26525_External_Affairs_English_AR_2015-16_Final_compressed.pdf.
 Ibid., 62.
 Alyssa Ayres, “India’s Stakes In The Middle East,” Forbes Asia, February 26, 2014, accessed February 5, 2017, http://www.forbes.com/sites/alyssaayres/2014/02/26/indias-stakes-in-the-middle-east/#572f812263b9.
 Girijesh Pant, “Reconstructing India-Gulf Relation in the Context of Arab Uprising,” in Meena Sinha Roy, Ed., Emerging Trend in West Asia: Regional and Global Implications (New Delhi: Pentagon Press, 2014): 257-279.
 Dinshaw Mistry, “Domestic and international influence on India’s energy policies," 1947-2008, in Ganguly Sumit, op. cit., 329.
 Ibid., 328-333.
 See Indian Ministry of Defence, “Ensuring Secure Seas: Indian Maritime Security Strategy, 2015," 1.2, accessed February 5, 2017, https://www.indiannavy.nic.in/sites/default/files/Indian_Maritime_Security_Strategy_Document_25Jan16.pdf.
 As of December 2016, 19 suspects were extradited from the Gulf, 18 from the U.A.E. and 1 from Saudi Arabia. See Government of India, Ministry of External Affairs, “List of Fugitives Extradited by Foreign Governments to India,” updated December 7, 2016, accessed February 5, 2017, http://www.mea.gov.in/toindia.htm.
 Biswajit Nag and Mohit Gupta, “The Rise of Gulf Investment in India: Searching for Complementarity and Synergy,” Middle East Institute, October 9, 2014, accessed February 6, 2017, http://www.mei.edu/content/map/rise-gulf-investment-india-searching-complementarity-and-synergy.
 “UAE investments in India estimated at $8 billion,” AMEinfo, July 12, 2015, accessed February 6, 2017, http://ameinfo.com/money/economy/uae-investments-in-india-estimated-at-8-billion/.
 Christophe Jaffrelot, “Client state’s dilemma,” Indian Express, July 22, 2016, accessed February 17, 2017, http://indianexpress.com/article/opinion/columns/saudi-arabia-pakistan-relations-islamic-state-attacks-medina-peshawar-riyadh-muslim-countries-usa-2928389/
 For the emerging trend, see Nasra M. Shah, “Recent Labor Immigration Policies in the Oil-Rich Gulf: How Effective Are They Likely To Be?” ILO Asian Regional Programme on Governance of Labour Migration, Working Paper No. 3, Asian Regional Programme on Governance of Labour Migration, accessed February 6, 2017, http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.1003.7779&rep=rep1&type=pdf; and “Is the Gulf Dream Fading for India’s Middle East Diaspora?” Knowledge@Wharton, Public Policy, September 21, 2010, accessed February 6, 2017, http://knowledge.wharton.upenn.edu/article/is-the-gulf-dream-fading-for-indias-middle-east-diaspora/.