India’s new Prime Minister Narendra Modi is expected to strengthen trade ties with the GCC and promote bilateral business agreements, according to an expert.
Modi, whose Bharatiya Janata Party (BJP) enjoyed a landslide victory during the recent elections in India, is known for his sharp business acumen. His win boosted India’s financial markets, with the rupee hitting its strongest level against the dollar in 11 months.
“The biggest impact for GCC with Narendra Modi having become the Prime Minister of India will be on the trade side more than politics,” said MR Raghu, senior vice president, Research at Kuwait Financial Centre (Markaz).
“From a GCC standpoint, India’s trade balance has been even with imports matching exports where inward investment by GCC in India has been minimal due to severe bureaucratic hurdles. Modi will certainly change that and make India somewhat easy place to do business.”
India, which needs an estimated $1 trillion by 2018 to complete its proposed infrastructure projects, is currently in the process of finalising a free trade agreement with the six nation GCC countries. Both the regions have identified sectors like oil and gas, fertiliser and IT as key areas of cooperation.
“From a foreign policy perspective, it is still not clear on what approach the new PM will take towards major blocks like US, China, Russia, Iran and the Middle East. The BJP manifesto has been very vague and hence it is not clear on what direction the foreign policy will take,” said Raghu.
“However, one thing is sure. He will try and augment the trade and investment link between India and GCC. He is shrewd to know that GCC is a rich pocket for inward investment in India, especially infrastructure and will go all out to woo them as he has successfully done for Gujarat.
“However, his closeness to Israel as an important investment partner in Gujarat may make GCC very cautious to deal with him to start with and may eventually warm up to India’s burgeoning opportunities. Saudi Arabia may emerge as a key partner to Modi as well as Iran (the second largest supplier of oil to India),” he added.