India-Saudi Arabia Exploring Joint Ventures in Defence Sector

Syllabus: GS2/ International Relations

Context

• India and Saudi Arabia are enhancing defence cooperation by focusing on joint ventures and industrial collaboration to localise defence production.

India Saudi Defence collaboration

• India and Saudi Arabia are focusing on strengthening defence ties to achieve self-reliance and mutual growth in defence manufacturing.
• Common goals: Saudi Arabia aims to localise 50% of its defence spending under Vision 2030, aligning with India’s Make in India initiative.
• Saudi Arabia signed a $250 mn contract for ammunition from Munitions India Limited, a Defence Public Sector Undertaking.
• Saudi Arabia has procured the 155mm Advanced Towed Artillery Gun System (ATAGS) from Bharat Forge. 
• Joint exercises:
  • Sada Tanseeq: The inaugural Army exercise held in Rajasthan in January 2024.
  • Tarang Shakti: Saudi Arabia participated as an observer in India’s largest air exercise.
  • Al Mohed Al Hindi: Bilateral naval exercise initiated in 2022.

India Saudi Arabia Relations

• Political Relations: The two countries established diplomatic relations in 1947. 
  • The royal visit of 2006 resulted in the signing of the Delhi Declaration, which was followed in 2010 by the Riyadh Declaration that elevated bilateral ties to a strategic partnership.
  • The Strategic Partnership Council (SPC) Agreement was signed during the 2019 visit of the Indian PM to Riyadh, which established a high-level council to steer the Indo-Saudi relationship. 
• Economic Relations: India is Saudi Arabia’s second-largest trade partner; Saudi Arabia is India’s fourth-largest trade partner.
  • The bilateral trade between the partners stood at $43.3 billion in 2023-24. Saudi’s direct investments in India amounted to $3.15 billion (as of March 2022).
  • There were 2,783 Indian companies registered as joint ventures/ 100% owned entities with investments worth approximately $2 billion in the kingdom. (As of January 2022)
• Energy Cooperation: Saudi Arabia was India’s third largest crude and petroleum products source for FY23. 
  • India imported 39.5 million metric tonnes (MMT) of crude from the country in FY23, amounting to 16.7% of India’s total crude imports.
  • India’s LPG imports from Saudi Arabia stood at 7.85 MMT, and 11.2% of its total petroleum product imports, in FY 23.
• Indian diaspora: As of 2023, there were 2.6 million Indians in Saudi Arabia. This is the second largest number of foreign workers in the country, after Bangladesh. 

Future Outlook 

• The shared aspiration to reduce dependence on defence imports and boost local production presents significant opportunities for both nations. 
• Joint ventures and collaboration in cutting-edge technologies such as AI and cybersecurity can enhance strategic autonomy.
• By aligning their goals under Vision 2030 and Make in India, India and Saudi Arabia can emerge as pivotal partners in shaping the global defence landscape.
• Continued collaboration is essential to ensure Indian workers’ success in Saudi Arabia, contributing to greater economic stability and development for both countries.

Source: TH