Why India is important for Saudi Arabia? Will they strike strategic deal that may reshape South Asia politics?

Prime Minister Narendra Modi is visiting Saudi Arabia when the kingdom in the Middle East is going through a transition with its economic and geostrategic policy revisited. While Saudi Arabia has planned a massive economic diversification, secure energy markets, and enhance defense capabilities, India too wants investment, fuel diversification and a stand-in regional politics along with taking leverage of the Indian diaspora. Though the process has been going on for quite some time and Narendra Modi has visited the kingdom three times, it has got a new dimension with the trade war that has been launched by US President Donald Trump. 

Under its Vision 2030 initiative, Riyadh wants to diversify its oil-dependent economy by investing in infrastructure, sports, tourism, health and technology. With its big market, skilled and cheap workforce and dynamic middle-class India, and being one of the world’s fastest-growing economies, New Delhi offers a unique opportunity. 

India and Saudi Arabia signed the Strategic Partnership Council (SPC) Agreement in 2019 when PM Modi visited Riyadh. The importance can be understood by the fact that the two countries signed 12 MoUs in the fields of energy, defense production, and civil aviation. Saudi Government-owned Aramco announced an investment of $50 billion in the West Coast refinery project in India. This oil refinery will be set up by Saudi Aramco, Abu Dhabi National Oil Company (ADNOC) and Indian firms.

The two countries are also working on a free trade agreement (FTA) between India and the Gulf Cooperation Council (GCC). The bilateral trade between India and Saudi Arabia reached $42.98 billion in 2023-24. India exported goods worth $11.56 billion and imported crude oil and other goods worth $31.42 billion. 

Earlier, Saudi Crown Prince Muhammad-bin-Salman announced to invest $100 billion in India. In his present visit to the kingdom, PM Modi may try to get as much investment as possible. 

Besides economic diversification and energy security, the two countries are most likely to discuss cooperation in defense and security. India can help Saudi Arabia in counterterrorism and maritime security. 

In the SPC Agreement signed by the two countries in 2019, defense cooperation was an important issue, the two countries held the naval exercise Al Mohed Al Hindi. Besides, a $225 million artillery ammunition deal was signed between the two countries in 2024. The first India-Saudi joint land exercise Sada Tanseeq-I was held in 2024, it was followed by a defense industry seminar in Riyadh in November 2024. 

All these issue may be discussed and further explored when Modi meets Muhammad-bin-Salman, or MBS, as he is called. However, there a few irritants as well. Riyadh's tilt towards Pakistan is something India frowns upon. Similarly, Saudi Arabia seems closer to Pakistan's stand on Jammu and Kashmir, though it continues with its policy of calling a bilateral issue between India and Pakistan. 

Analysts also point out that the treatment of Muslims in India is an issue that upsets Riyadh. Being a powerful Islamic country and the guardian of Mecca and Madina, Saudi Arabia can not ignore the treatment of the second-largest Muslim population in India. Besides, it has to take care of the politics of Ummat or the Muslim world and that of the Organisation of Islamic Cooperation.