Strong ties will benefit both India and Saudi Arabia

WION
Delhi Updated: Oct 30, 2019, 02:40 PM(IST)

Saudi Arabia Crown Prince Mohammed bin Salman, India Prime Minister Narendra Modi and Saudi Arabia King  Salman bin Abdulaziz. Photograph:( ANI )

Story highlights

So why does Saudi Arabia want to move away from oil? Because depending on oil is dangerous.

Saudi Arabia wants to forge strong ties with India. This is a relationship rooted in the realm of political and economic realities. 

Truth be told, strong ties will benefit both sides. India needs oil. What about the Saudis? Why has Riyadh prioritised Delhi?

What is the strategic significance? On WION Edit, we will explore these questions. First, let's tell you what India has been up to. Diversifying sources of energy.

PM Narendra Modi's government is credited for boosting India's ability to do this through multiple engagements. After US sanctions on Iran and Venezuela, India needed to secure its energy interests. 

And Saudi Arabia was quick to fill the gaps. Right now, India imports 83 per cent of its oil needs and Saudi Arabia is the second-biggest supplier

So technically, access to Indian markets is a huge economic benefit for a country like Saudi Arabia - whose economy is fueled by oil. But that's not the only draw for Riyadh.

It is looking at the long term and India's growing clout. Here are some points to note:

Going forward, Saudi Arabia wants to rely less on its oil reserves. In March 2018, the Kingdom announced the largest renewables project ever, a solar push worth over 200 billion dollars.

That project failed to take off and was eventually. But Saudi Arabia has not given up its goal to move away from oil dependence. Recently, Riyadh tripled its renewable energy target. The focus is wind and solar energy, projects have been tendered.

So why does Saudi Arabia want to move away from oil? Because depending on oil is dangerous.

First, fluctuating prices hurt the Saudi economy. A drop in oil prices puts them under fiscal pressure. Two, as the world transitions towards clean and renewable energy, countries like Saudi Arabia will be hit hard.

So what can the Kingdom do? Shift to renewable energy. Insulate the economy from oil price shocks and as a buffer, establish ties with countries that import oil-- i.e. India.

Yes, countries will aggressively push for climate action in the coming years. But that doesn't imply a total ban on fossil fuel. At least for the next few decades.

And countries like India and China will have more energy needs as their economies expand. So Saudi Arabia will find no better importers than India and China during this transition period. Besides, India will be perfectly placed to help Saudi Arabia through the clean energy transition.

The solar market in India is robust and ever-growing, the synergies are also in India's favour.

Besides, Saudi investments in India are strategic. The return from Indian markets is one of the best in the world. And the economy is pegged to grow further in the coming decades.

This is the grand plan, Saudi investments in India are strategic and a win-win proposition for both. This relationship is no more about remittances or immediate gains. India is one of the biggest games in town and Saudi Arabia only knows it too well.

(Disclaimer: WION Edit is the channel's take on the big events of the world)
 

Read in App