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with the Gulf Arab rulers. Thus, during the Cold War years, political
engagements between India and the Saudi Arabia were minimal, if not
non-existent.
Despite this political gap, trade and commerce continued for centuries,
especially between the Western coastal regions of India and the Gulf. This
was equally true for Saudi Arabia. The situation changed dramatically
when India began to liberalize its economy, a phase that also coincided
with the end of the Cold War. If the oil crisis of 1973 exposed India’s
vulnerability to its energy dependence upon the region, the economic
reforms of the 1990s contributed to its economic growth and resultant
political influence. Both these developments had a profound impact upon
the Indo-Saudi relations. Indeed, since 2006, the Kingdom has been
among the top five trade partners of India and the largest supplier of crude
oil. With a sizeable Indian expatriate workforce, the Kingdom is also one
of the biggest sources of remittances. The economic component of the
bilateral relations can broadly be divided into three categories, namely,
trade and commerce, energy supplies and expatriate labour force.
Bilateral trade
Since the mid-1970s, Saudi Arabia has been one of India’s major trading
partners due to energy imports, but the overall trade was small. Despite
being the second most populous country in the world after China, India
was unable to make a mark on international trade primarily due to its weak
economic basis and slow growth rate. When economic reforms were intro-
duced in 1991, its overall foreign trade stood at US$42 billion with an
annual economic growth rate of 1.1 per cent. It had to wait until 2002 to
register US$100 billion foreign trade and reached close to US$800 billion
in 2011–12 before global recession set in.
This pattern can be noticed in the Indo-Saudi relations. As highlighted
in Table 9.1 and Fig. 9.1, the volume of trade witnessed tremendous
growth during the past two decades. In 1991–92, it stood as low as 1.5
billion dollars and crossed the 2 billion mark in 1996–97. Between 2000
and 2006, the Directorate General of Foreign Trade (DGFT) discontin-
ued the practice of identifying sources of India’s energy trade and this
resulted in Indo-Saudi trade figures showing a drop, reaching US$1.4
billion in 2000–01. As the energy trade began to increase, the past practice
of identifying the sources of supplies was restored in 2006 and signalled
the real swing in favour of Saudi Arabia. This coincided with the visit of
P. R. KUMARASWAMY AND MD. M. QUAMAR