Recently, a new turn of events happened in South West Asia, where Saudi Arabia and other Arab countries have cut all diplomatic ties with Qatar in a move to isolate the nation.
India having 7 million Indians in the Gulf (6 lakh in Qatar), has to navigate the faultlines in the region.
The Indian government has seen these developments as internal matter of Gulf Cooperation Council (GCC).
External Affairs Minister Sushma Swaraj had expressed hope that things will get normal within the GCC, saying that such things have happened in the past as well. However, the move will have a major impact on India-Qatar relationship.
The inflow of Qatar's FDI in India is significant. Meanwhile, Qatar, which is the home to a major US military base, called for a dialogue of openness and honesty.
These events will have a huge impact on India’s relationships with Qatar. We have explored the probable impacts of these events on India.
As Indian authorities has termed it an intra-GCC conflicts which is related to dynamics and geopolitics over Qatar’s support of Muslim Brotherhood and alleged support to the Islamic State and al-Qaeda. So India does not need to take any particular stand on this conflict.
India also has good relations with Saudi Arabia, the world’s biggest exporter of crude oil. Abu Dhabi in the UAE is also a major oil exporter.
Qatar is the biggest supplier of liquefied natural gas (LNG) to India. It is a major seller of condensate – a low-density liquid fuel and refining product derived from natural gas.
So, India is required to have a balanced stance for the time being unless Indians living in Qatar are affected in a major way.
This has meant closer strategic ties between India and these West Asian countries, which have traditionally been closer to Pakistan.
In recent years, the enhanced counter-terrorism cooperation with Saudi Arabia and UAE, in particular, has yielded rich dividends, as all of them have been able to intercept and send back people with links to the Islamic State.
Saudi and the UAE were among the few countries which recognized the Taliban government in Afghanistan in the 1990s, Qatar had facilitated talks with Taliban by allowing them to open an office in Doha.
As India’s strategic and security interests are intertwined with its relations with these West Asian countries, it will be difficult for India to choose sides.
Also, India is heavily dependent on West Asian Countries for its energy demand. It is estimated that India depends on Gulf countries for almost half of its energy needs — both in oil and gas sector.
The turmoil in the Gulf, as was witnessed during the Gulf war, Arab Spring, war in Yemen, Libya crisis, has always had the tendency to adversely impact the flow of energy from the region to India.
Impact on India-Qatar Bilateral trade
The Bilateral trade between India and Qatar has been very good in recent years.
The Bilateral trade had reached a high of $ 16.68 billion in 2013-14, and it was reduced to $ 9.93 billion in the 2015-16 fiscal.
India’s exports have fluctuated in the range of $ 900 million to $ 1,000 million.The value based Imports have declined sharply in the last 1-2 years due to the decrease in international oil and gas prices.India is in a need of $ 1 trillion in the next 5 years in infrastructure sector alone and Qatar Investment Authority (QIA) can invest heavily in this sector.
India has been putting efforts to actively engage with QIA and other state-owned and private entities in Qatar. India also has been highlighting policies such as ‘Make in India’ and the advantages of investing in India.
Impact on India’s corporate sector
The Gulf-Qatar events will send a warning message to corporate sector in india.
The corporate sector has enhanced their businesses in Qatar and is looking forward to the vast potential in that country.
Many reputed Indian companies, particularly in infrastructure /construction and IT, hare functioning in Qatar, including MahindraTech, L&T, Punj Lloyd, Voltas, Simplex, TCS, Wipro, , HCL, Shapoorji Pallonji, SBI and ICICI.
Other Indian banks have limited operations under the Qatar Financial Centre or private exchange houses in Qatar. A part from this, Qatar Airways now has 102 weekly passenger flights to 13 Indian cities.
Impact on India-Qatar Bilateral Relations
India and Qatar’s relationship has a long history and their cooperation extends to diverse sectors.
Present Indian Prime Minister Narendra Modi had paid a landmark official visit to Doha from 4-5 June 2016 when he was invited by HH Sheikh Tamim Bin Hamad Al Thani, the Emir of Qatar.
Hamad Al Thani had also visited India in March 2015. Even his father had visited India several times.
Apart from these visits, India has major military relations with Qatar, where they have a maritime defense agreement to handle threats from extremist elements.
In terms of economic ties, India’s exports to Doha crossed the billion-dollar mark to touch $ 1.05 billion in 2014-15 and total bilateral trade reached $15.67 billion.
In March 2014, Indian contractors Larsen & Turbo (L&T) won a QR 2.1 billion road project in Qatar.
Larsen & Turbo has also secured a $740 million order from Qatar Railways Co for the construction and design of the rail line for the Doha Metro project in Qatar.
Impact on Fuel supplies
India’s Petronet has stated that the recent development in West Asia will not have much impact on gas supplies from Qatar after the recent developments.
Petronet LNG is India’s biggest gas importer. It buys 8.5 million tonnes a year of liquefied natural gas (LNG) from Qatar under a long-term contract. It also buys additional volumes from Qatar under spot deals.
Impact on India Diaspora
In present, the Indian population in Qatar stands at around 650,000. The community of Indians in Qatar entails Indian expatriates in Qatar and people born in Qatar of Indian origin.
The limits placed on airspace access by the Saudi-led grouping won’t have any impact on the Persian Gulf.
Direct travel for Indians living in Qatar to the UAE, is likely to be negatively affected as it has joined Saudi Arabia, Egypt and Bahrain in denying airspace to Doha.
India will face an immediate issue i.e. the movement of workers in the region, as Qatar Airways will find itself isolated after the Saudi-led alliance’s decision to impose a travel ban.
Around 24000 Indians use Qatar Airways to travel to Doha and other places in the region. This will be a big challenge for the Indian government to navigate.
If Indian workers in the region, who send remittances worth over US$ 60 billion, are caught in the turmoil, the image India who takes pride in rescuing Indians in distress will be badly impacted. And, as we know, apart from challenges these turn of events will open doors for many opportunities for India. So it will be interesting to how present Indian government responds to this situation.