Economic Significance of West Asia
- The diplomatic fallout from the provocative and communally charged comments made by two erstwhile spokespersons of the ruling Bharatiya Janata Party (BJP), forced the government into firefighting mode earlier this month after several West Asian nations including Qatar, Kuwait, Iran, Bahrain, Oman, Iraq, Saudi Arabia and the UAE as well as the 57-nation Organisation of Islamic Cooperation (OIC) and the six-member Gulf Cooperation Council (GCC) took strong exception to the remarks denigrating Islam and the Prophet Muhammed.
- India’s ties with this region dates back to centuries, starting from the maritime trade, exchange of valuable goods, etc.
- So, from hundreds of years there is a cultural bondage which has developed between India and the Gulf.
- The western Asia also acted as a connecting point to the west in the ancient days especially to Greece, Rome and other European empires.
- In a more contemporary historical context, the British colonial era saw the advent of even a loose common monetary system with the rupee serving as legal tender in several Gulf states till the middle of the 20th century.
- It was only after the exploration of the oil resource in the region during the colonial era, the balance of trade with India started to alter.
- As of today, the west Asian region is one of the major suppliers of oil to India, it makes upto three fifth of the total supply.
- The merchandise trade is also significant marking upto one sixth of India’s total bilateral merchandise trade.
- In terms of remittances, West Asia plays a huge role as the region houses about 90 lakh Indian people.
- It has provided them with economic opportunities and due to which India receives upto $40 billion from West Asia.
- This amounts to 55% of the total remittances that India receives from all over the world.
- Apart from this India also receives significant share of the Sovereign Wealth Funds from West Asia.
- Recently India has also signed a Comprehensive Economic Partnership Agreement (CEPA) with the UAE.
Why is India so dependent on West Asian countries for its energy needs
- The refineries present in India are configured to process the sulphur-heavy sour grades of crude that are produced in the Gulf region.
- And with the sweeter (low sulphur) grades of oil such as Brent proving comparatively costlier, India’s crude purchases have over the last two decades gradually shifted to being more weighted towards the Oman and Dubai sour grades.
What is the state of the non-oil trade?
- It is a matter of fact that over the last few years, the two way merchandise trade with Iran and GCC members accounted 15% of the total trade.
- Among this UAE stands first with $275 billion share followed by Saudi Arabia with a share of $153 billion.
- Also, this region is a market for Indian commodities ranging from tea and basmati rice to electrical equipment, apparel, and machinery.
- As we know this region houses huge diaspora of Indians, their safety is of utmost importance.
- So domestic politics must not spoil the liberal image that India has built over the past and must be aware of the consequences.
Source The Hindu