With the fluctuations of oil and gas prices creating shocks to their economies, Gulf states may want to rethink the peg to the U.S. dollar.
The Bania is a community of Hindu traders of the Mahajan caste from the westernmost Kutch region of Gujarat, India. Oman’s eastern port city of Sur is 600 miles from India’s port town of Mandavi, whose traders were selectively granted Omani citizenship on a case-by-case basis by the late Sultan Qaboos bin Said. This is a rare privilege unheard of elsewhere in the Gulf region, especially for minority outsiders. The title of sheikh was bestowed by the late sultan to Mandavi’s community elder Kanaksi Khimji, who manages the relationship with the Omani authorities on behalf of the tribe. After 1970, Oman attempted to integrate different communities, including the Bania, as part of Qaboos’ national building initiative.
The first Bania arrived in Muscat in the 1780s. Bania clans have played an important role in elevating India’s relationship with Oman to the same level of importance as those with Saudi Arabia and the United Arab Emirates. India and Oman have had a special relationship since the early 1970s, and Indian workers form a large expatriate diaspora in Oman. India is an academic magnet for Omani students pursuing higher education in cities such as Pune, as well as a medical tourism hub with many Indian hospitals on the authorized list of the Omani Ministry of Health. Omani military personnel have been trained in Indian military training institutions since the colonial era.
India’s military access to Duqm port is crucial as India does not have access to facilities in other Gulf Arab states. The exceptional nature of the relationship is a function of a shared interest in maritime security and longstanding commercial ties.
The Bania and the Current Indian Power Elite
The Bania traditionally played the role of banker to the royal family during Oman’s glory days at the helm of a maritime empire that stretched from Gwadar to Zanzibar. In contemporary times, the Bania served as the go-to supplier of goods and services for government contracts due to the peculiar political economy of patronage between the merchant elite families and the Omani royal family. In the pre-Qaboos era, when Oman was not open to diplomatic ties with the outside world other than Great Britain and India, the Bania were active players in the market. As the country flourished after 1970, Bania-owned retail and logistics businesses grew, further consolidating business ties with Oman.
In February 2018, Indian Prime Minister Narendra Modi spoke at a community outreach event at the Sultan Qaboos Sports Complex in Bousher that was financed by the Bania’s Khimji family. The Bania community also supports schools, clinics, and the century-old Shiva Temple in Muscat, where Modi offered prayers. Modi also visited Manama’s Shreenathji Temple, the oldest in the region, during a visit to Bahrain. The optics of these temple visits are significant for the prime minister’s Hindu nationalist voter base.
Before Modi, Indian-Omani relations were lukewarm, as the administration of his predecessor, Manmohan Singh, did not consider Oman and the Gulf states a foreign policy priority. That has changed under the Modi government. In December 2019, India’s minister of external affairs, Subrahmanyam Jaishankar, visited Oman, meeting the Minister of Foreign Affairs, Yusuf bin Alawi. The two met again at the Munich Security Conference in February.
In addition, the governments of India and Oman signed an agreement on legal and judicial cooperation in civil and commercial matters, which was ratified in March 2020 in a royal decree by Oman’s new sultan, Haitham bin Tariq al-Said.
The Omani Establishment Connection
As mentioned earlier, a few hundred Bania have been granted Omani citizenship by the royal family, which is unusual for non-Muslim minorities in the Gulf. And a few thousand with Indian passports are multigenerational migrants who have investor or employment visas and run businesses as shadow partners with the Omani arbab, the visa sponsor under the kafala system of labor governance in the Gulf states.
Shadow businesses in Oman are operated on the ground by an expat, in this case, a Bania, while the official commercial registration of the organization is in the name of a local Omani citizen. Note that this form of rent-seeking, in which Omani sponsors are business owners on documentation but not active partners in shadow businesses, has been actively discouraged by the Omani authorities. However, Bania who are Omani citizens circumvent this arrangement as they are active businessmen themselves.
There are Bania in other Gulf states, such as Dubai, where some operate businesses in the district near the Dubai Museum. The neighborhood where the old Hindu temple stands is also under the stewardship of the Bania community, and newer temples are being constructed in Jebel Ali and Abu Dhabi. Dubai’s ease of doing business and the decades of active Bania presence in the market has not eliminated the gap between a kharji, or foreigner, and an Omani citizen, even though the UAE permanent residence golden card scheme has recognized some of these early Hindu Bania traders. The difference between a Bania in Dubai who holds an Omani passport and a Bania on an Indian or another passport is that the former enjoys access to local power structures in Dubai, as well as ongoing investments that generate political capital back in Gujarat. This is especially the case in the Kutch region (financing schools, temples, and hospitals, as well as recruiting youth for work in Oman), which helps foster dialogue between Oman and India, as Modi and India’s home minister, Amit Shah, are both Gujarati. Also, local citizens can fulfill prerequisites to government contracts as nationalization requirements mandate local ownership.
The Omani Bania are integral to the supply chain of infrastructure projects in Oman, connecting the country to the global grid by operationalizing many local supplier in-country value contracts on behalf of global companies. In-country value is an important pillar of the evolving social contract between the private sector and the government in which local employment and sourcing is embedded in the public sector. It helps to integrate local value retention in the public sector tendering process.
China is investing in Oman as part of its Belt and Road Initiative, funding large-scale projects in Duqm. China and India are collaborating on Omani Belt and Road Initiative projects, in which Bania-operated companies are construction contractors, consultants, and suppliers with significant Indian human resources on these projects. An Omani-owned but Bania-helmed engineering consultant of an ICV partner played an instrumental role in getting an Asian Infrastructure Investment Bank-funded solar project in Ibri off the ground.
Building Sustainable Indian-Omani Ties
The new Omani government may be able to tap into the global reach of the Bania network to mobilize talent and capital as the present generation is spread out extensively across Africa, East Asia, and North America. Many Omani royals are active in the private sector, such as Sayyid Shabib bin Taimur, whose daughter Tania married a Khimji scion.
Recently, the Indian government purchased a stake in an oil field in Oman. There has been a significant investment from a Gujarat-based company, such as Sebacic Oman in Duqm, the only one of its kind in the Middle East. A close working relationship with the current Indian power elite can help attract more investments from Indian companies into Omani port centers such as Sur and Salalah, reinforcing the historical partnership between the two countries.
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