The agreement in March between Saudi Arabia and Iran to restore ties is certain to have implications for India, although there is not complete consensus on those implications. One analyst articulated the dominant view that it was “stunning” that China brokered the deal, suggesting that “it demonstrates that U.S. influence and credibility” in the region has diminished. Others termed it a “wake-up call” for India, arguing that India is encamped perilously in a U.S.-led I2U2 grouping along with the United Arab Emirates and Israel that is postured for gradually reduced influence, while the new Saudi-Iranian-Chinese counteralignment is also likely to damage India’s national interests in the Middle East and the broader region of West Asia.
However, India only stands to gain from any lessening of hostilities in a region that is prone to instability. A spokesperson from India’s Ministry of External Affairs stated recently that “India has good relations with various countries in West Asia” and “deep abiding interests in that region” and expressed support for “dialogue and diplomacy as a way to resolve differences.” Such remarks highlight India’s policy of “strategic autonomy,” which is the “ability of a state to pursue its national interests and adopt its preferred foreign policy without being constrained in any manner by other states.” Adhering to this strategy, India stays out of costly external entanglements abroad and pursues an enabling environment to accomplish its ultimate goal of fostering economic growth. The China-brokered deal in the Middle East grants India the desired strategic space to enjoy the maximum benefits of rapprochement – less instability in a volatile region and opportunity to engage with former rivals Saudi Arabia and Iran – while investing in minimal burden sharing responsibilities. Therefore, this rapprochement plays to New Delhi’s advantage as it does not constrain India’s choices; India has the autonomy to work bilaterally with both Saudi Arabia and Iran each on their own terms.
In the Middle East, India’s strategic autonomy is defined by an “independent or a dynamic” foreign policy as an offshoot of its nonalignment philosophy. In today’s militarily unipolar, economically multipolar, and politically fractured world order, strategic autonomy for India is being recalibrated as “all-alignment” or a “multi-dimensional engagement” with countries based on “issues of shared interest and not on ideology.” Indian External Affairs Minister S. Jaishankar explained that seeking strategic autonomy is not about joining alliances or pursuing isolation; rather it is about adjusting policies in accordance with the security environment. He said that “India will never be part of an alliance system.”
This strategic autonomy policy does allow for a range of partnerships, evident in India’s growing “strategic partnerships” with various countries in the Gulf region. In 2003, India established its first strategic partnership in the Gulf region with Iran. It has since established strategic partnerships with Saudi Arabia, the UAE, and Oman. In 2008, India signed a security and military cooperation agreement with Qatar. Continuing the policy of diversified engagement, Prime Minister Narendra Modi visited Iran in 2016 and signed agreements on trade, investment, defense and security, and regional connectivity. Separately, India signed a strategic partnership agreement with Israel in 2017, when Modi visited the country on a historic visit marking 25 years since India established full diplomatic relations with Israel. Indian leaders see strategic autonomy as imperative for India to attain a leading power, rather than balancing power, role in the Gulf and broader Middle East region.
Gulf “Look East” Agendas Meet India’s “Act West” Policy
Amid realignments in the Gulf, India’s “Look West” or “Act West” policy is aligned with the “Look East” policies of the Gulf Arab states and Iran. The Look East policy of the Gulf Arab states follows a strategic shift in the global energy market, where India and China are the new global energy players with a voracious appetite for Gulf oil and gas. India is set to witness the world’s biggest rise in energy demand this decade, climbing at a rate of more than 3% per year up to 2030; oil demand is projected to increase to nearly 7 million barrels per day by 2030 from 4.7 mb/d in 2021, and natural gas demand is expected to reach 115 billion cubic meters per year by 2030 from 66 bcm per year in 2021. Meanwhile, Iran’s eastward-looking approach brings it closer to Russia, China, and potentially India as a way to counter U.S. influence in the Middle East and West Asia.
As a rising economic and military power, projected to be the fourth-largest economy in the world, overtaking Germany by 2026, India is heavily dependent on the Gulf Arab states and Iran. Saudi Arabia and other Gulf Arab countries provide energy security for India and are home to millions of Indian expatriate residents who contribute immensely to its gross domestic product. Meanwhile, India’s relations with Iran go beyond energy security goals. They include India’s cross-border connectivity through the Chabahar Port project, in southeastern Iran, and the International North-South Transportation Corridor to access promising energy-rich markets of Central Asia and Russia while also promoting stability in Afghanistan.
Saudi Arabia is home to one of the world’s largest Indian diaspora populations, totaling nearly 2.5 million. This population sent around $13 billion in remittances in 2021, which was about 5% of the total $100 billion received by India that year and second only to the nearly $20 billion sent by Indians living in the UAE. Moreover, as the third-largest oil importer in the world, India relies heavily on Saudi Arabia, which supplies 18% of India’s crude oil and nearly 22% of its liquefied petroleum gas. Broader economic relations between Saudi Arabia and India are strong and growing. Saudi Arabia is India’s fourth-largest trading partner; in the 2021-22 fiscal year, bilateral trade was estimated at $42.8 billion. Additionally, relations have transitioned to a “strategic partnership” with the October 2019 formation of the Strategic Partnership Council to advance military, intelligence, and defense cooperation. Taken together, for purposes of statistical clarity, the GCC countries are currently India’s largest trading partner with trade in fiscal year 2021-22 estimated at over $154 billion. Furthermore, India-GCC free trade agreement talks are ongoing with an aim to boost economic ties between the two regions.
While periodic Western sanctions have impacted trade relations between India and Iran, India for sustained periods continued to import oil from Iran to meet increasing demand. Iran was the second-largest oil supplier to India in 2008-09 and again in June 2018, when Iran snatched the spot away from Saudi Arabia. However, India stopped importing oil from Iran when U.S. sanction waivers granted to eight buyers expired in May 2019. Indian media reports indicate that as of late April 2019, India’s imports of Iranian oil dropped from about 2.5 billion tons per month to 1 million tons per month. Correspondingly, Iran’s position dropped from India’s third-largest trading partner to its 38th, showcasing the broader impact of Western sanctions on Iran across sectors.
The development of Chabahar Port is the centerpiece of India’s Iran policy. In January 2003, India, Iran, and Afghanistan signed a joint memorandum of understanding to develop the port in Chabahar, but the project stalled owing to Western sanctions on Iran. In 2015, New Delhi and Tehran signed a $195 million agreement for the development of the port. Its completion would cut India’s transportation costs and freight time to Central Asia and the Gulf by about one-third and allow Indian goods direct access to Afghanistan, avoiding Pakistan, which has blocked land transit for India. India recently sent 20,000 metric tons of wheat to the Taliban-led government in Afghanistan that was transferred through Chabahar Port.
In May, Indian National Security Advisor Ajit Doval met with Iranian President Ebrahim Raisi in Tehran, where they pledged to take ties to a “new level,” focusing on economic and commercial engagements, including the possibility of long-term trade in rupees. However, for now, such aspirations remain constrained by the reality of sanctions imposed on Iran.
Counterrealignments: Connecting India to the Middle East
The China-negotiated rapprochement between Saudi Arabia and Iran is not the only game in town – there are counterrealignments currently taking shape in the region, led by the United States, bringing in India to play a pivotal role as a “bridging” power connecting the Indian subcontinent to the Middle East. In May, the national security advisors of India, the United States, Saudi Arabia, and the UAE gathered in Riyadh, where they agreed to “advance their shared vision of a more secure and prosperous Middle East region interconnected with India and the world.” This vision includes a project to connect Gulf and Arab railways and link them to India via shipping lanes from ports.
In a May speech, National Security Advisor Jake Sullivan said the U.S. “commitment to the Middle East region is unshakable” and Washington is eyeing “new areas of cooperation between New Delhi and the Gulf as well as the United States and the rest of the region.” This effort includes leveraging existing platforms like I2U2 and the strong India-UAE relationship through their Comprehensive Economic Partnership Agreement to more effectively integrate the region.
Other realignments currently taking shape in the region indicate a noticeable shift toward multipolarity, the pursuit of national interests, and enhancing strategic autonomy. Senior officials from a number of countries, including Saudi Arabia and Iran, were in Cape Town in early June to discuss the potential expansion of the BRICS bloc comprised of Brazil, Russia, India, China, and South Africa. Saudi Arabia and Iran have also joined the China-dominated Shanghai Cooperation Organization – Iran as a full member and Saudi Arabia as an official dialogue partner. For the moment, it is evident that Saudi Arabia and Iran are increasingly diversifying their foreign policies and pursuing strategic autonomy as a counterweight to the United States and the West.
India’s pursuit of strategic autonomy stems from a need to build ties with all major powers in the Middle East to enable robust economic growth. This poses a dilemma for India and requires a careful balancing act. On the one hand, India prefers a U.S.-led security order in the Middle East. On the other hand, escalating U.S.-Iran and Israel-Iran tensions may hinder New Delhi’s plans to engage more effectively with Tehran. Here, India benefits from a policy of strategic autonomy that enables it to navigate the Middle East’s historical rivalries and protracted conflicts.
While in the past India’s choices in the Middle East were constrained by a reactive foreign policy, making it a relatively passive spectator as regional conflicts played out, it now enjoys warmer ties with Saudi Arabia, the UAE, Israel, and Iran simultaneously. India is no longer a silent observer but a rising economic power with growing influence in the Middle East.
