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India’s Geoeconomic Pivot to West Asia


By Md. Muddassir Quamar (PhD)


A simultaneous foreign policy recalibration focused on economic considerations resulted in ‘Look East’ and ‘Look West’ policies


For long since independence, India’s external approach revolved around geopolitical considerations. Decolonization, Asianism, and non-alignment defined New Delhi’s foreign relations and policies. While leaders made periodic attempts earlier, a clear shift came about only after the end of the Cold War when Prime Minister Narasimha Rao began the process of economic liberalization. A simultaneous foreign policy recalibration focused on economic considerations resulted in ‘Look East’ and ‘Look West’ policies. With trade and business taking center stage, India’s foreign relations moved away from non-alignment to multi-alignment. Nonetheless, domestic and international compulsions often led New Delhi to tread cautiously, balancing economic interest with political messaging.


In relations with the Gulf and West Asia, while trade, business, and energy gradually took center stage since the 1990s, several domestic and external factors compelled New Delhi to remain cautious and, at times, indifferent to the economic potential in relation to the region. The proximity of the Gulf States to Pakistan, fascination with Iran, the lack of trust vis-à-vis the United States and European Union, strategic risks due to political instability, and security challenges meant that despite growing economic ties, India did not make efforts toward realizing the potentials in relations with the Arab Gulf countries.


In the 2000s, besides trade, business, energy, and expatriates, the two sides witnessed limited issue-based cooperation, such as in fighting piracy, enhancing maritime security, and combating organized crime and terrorism. It did not, however, translate into strategic partnerships with the regional countries. In some cases, such as with Oman and Saudi Arabia, India took essential initiatives—still, these needed follow-ups, which could not be done due to domestic preoccupation or political ineptitude.


Further, the obsession of the strategic community and decision-makers with Iran meant that much energy was invested in developing the Chabahar Port, which took almost a decade and a half to become functional and became mired in troubles due to US-Iran problems. Projects such as the International North-South Transport Corridor (INSTC) and Iran-Pakistan-India (IPI) gas pipeline were stillborn due to geopolitical challenges and inflated assumptions of economic potential.


And, though New Delhi took initiatives to expedite economic engagements with the Gulf Cooperation Council (GCC) States, such as signing the framework agreement on India-GCC free trade agreement (FTA) in August 2004, these got interrupted due to domestic problems or external factors. The India-GCC FTA negotiations stopped after two rounds in 2006 and 2008 due to differences in economic priorities. Moreover, the Middle East faced unprecedented political upheavals since 2011, resulting in New Delhi’s somewhat dispirited approach towards the region.


The change of government in New Delhi in 2014 brought a shift in approach towards the Gulf and West Asia. Building on the groundwork done over the two decades, Prime Minister Narendra Modi undertook a diplomatic blitz to engage the Arab Gulf countries and Israel while also adopting a friendlier approach towards the United States, European Union, and Japan. The deterioration in relations with China due to border skirmishes (Doklam and Galwan) and the increased focus of the United States in the Indo-Pacific due to the rise of China brought a convergence of Indian interests with the United States and Japan. Economic disruptions caused by COVID-19 highlighted the need for greater economic cooperation among like-minded global powers.

Picture Source: Manohar Parrikar Institute for Defence Studies and Analyses

In the meantime, the Gulf countries, especially Saudi Arabia and the United Arab Emirates, expedited their quest for economic transformation, partly motivated by the events of the Arab Spring. The gradual change of approach towards Israel, the eventual breakthrough in the form of the Abraham Accords in September 2020, the decision to end the altercation with Qatar in January 2021 through the AlUla Declaration, and Saudi decision to renew diplomatic ties with Iran indicated the intent to focus on economic revival and avoid political instability and conflicts.


The India, Israel, United Arab Emirates, and the United States (I2U2) quadrilateral initiative indicated a change in India’s approach to the Middle East, complementing bilateralism with minilateralism. Improvement in relations with Egypt and Greece underlined that India’s economic interest extends beyond the ‘extended neighborhood’.


The announcement of the India-Middle East-Europe Economic Corridor (IMEEEC) during the G20 summit in New Delhi and the enthusiastic response from the partnering countries, including Saudi Arabia, United Arab Emirates, Jordan, Israel, Greece, Italy, Spain, and other members of the EU underline the significant of the proposed corridor. The possibilities of economic growth and regeneration for the three regions are notable. There are also speculations on how it can prove a competitor to China’s Belt and Road Initiative (BRI).


Simultaneously, the historic significance of the Gulf and West Asia region as the trading hub connecting Asia to Europe and Africa is noteworthy. In that respect, the IMEEEC represents the possibilities of reviving the centrality of the Indian Ocean region as the center of global trade, business, and mercantile activities. The trading route passing through the western Indian Ocean has a historical significance. The IMEEEC proposes an eastern corridor connecting India to the Gulf and a northern corridor connecting the Gulf to Europe. This will be complemented with a rail network connecting the east coast of the Arabian Peninsula to the Eastern Mediterranean region. The intent is to use the logistics and supply chain infrastructure coming up in the Gulf and West Asia to revive the historical trading connections between India, West Asia, and Europe.


Undoubtedly, there remain challenges regarding political and security risks, the financial viability of investments in mega infrastructure projects, and the broader question of environmental hazards. However, the countries involved have already discussed these challenges and will undoubtedly examine and fine-tune them as they go forward.


The resumption of India-GCC FTA negotiations is significant in this context. India and UAE signed a comprehensive economic partnership agreement in March 2022, and in November 2022, after a gap of 14 years, India revived FTA talks with the GCC. After some hiccups and a change in chief negotiator from the GCC’s side, the talks have resumed, and the sides are likely to sign a comprehensive economic partnership agreement soon. The preferential trade agreement would mean greater trade, business, and investments with the GCC countries.


Notably, the Gulf and West Asia region is already the biggest trading block for India, with a US$240 billion bilateral trade in 2022-23. There is robust commodity and services trade, and with an FTA, it will likely get a boost. Thus, both the IMEEEC and India-GCC FTA are interlinked and will contribute to the success of each other.


Indeed, the economic feasibility of these economic and connectivity projects are yet to be tested. These, nonetheless, show the intent of India’s economic aspirations and globalized outlook. In West Asia, it means boosting economic activities with business, trade, and investments, and connectivity projects underlining a nuanced shift in India’s approach to the region. The geopolitical risks remain but they no longer inhibit New Delhi from exploring economic possibilities and interests.


The growing degree of trust and confidence between India and the Gulf countries, a sense of urgency towards economic rejuvenation at the highest level among the regional governments, and a show of intent on the part of the United States to facilitate the realization of Gulf economic visions has brought a change in how India is engaging the Gulf and West Asian countries. This is indeed the beginning of India’s geoeconomic pivot to West Asia.



Originally Published : The Financial Express, 18th September 2023


Posted in SIS Blog with the Authorisation of the Author


Md. Muddassir Quamar is an Associate Professor at Centre for West Asian Studies, School of International Studies, Jawaharlal Nehru University, New Delhi, India

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