Article Library / 2016

2016 Annual Assessment

Today, the strongest and also newest driver of close links between India and the Middle East is India’s need for Middle Eastern oil energy resources. And at the same time, the oil and gas producers need safe markets, investments, and protection now that the United States no longer needs their oil and gas – their dependence on Asia is no less critical than Asia’s dependence on their energy. India’s demand for oil imports is growing fast. In the last years, two thirds of its imported oil came from the Middle East, a proportion predicted to grow to over 90 percent by 2030. As a direct outcome of the energy interdependency, trade between India, the Middle East and North Africa has increased 25 times since 2001 and currently exceeds $170 billion, only three percent of which is trade with Israel. Middle Eastern trade represents a quarter of India’s total trade, twice as much as India’s trade with the United States or China. Trade is accompanied by huge investment flows in both directions, joint ventures and remittances of $30 billion or more flowing back to India from estimated seven million Indian workers in the Gulf.

For historical, geopolitical, and domestic (large Shiite minority) reasons, India wants good relations with Iran, but most of its Middle Eastern oil is imported from the Arab Gulf. Any serious clash between Iran and the Arab world would generate dilemmas India does not wish to face.