RIYADH: In a game-changing move, Saudi Arabia, the world’s largest crude supplier and the Gulf’s most powerful economy, has unveiled plans to create a $2 trillion sovereign wealth fund. This path-breaking decision has coincided with India’s Prime Minister Narendra Modi’s maiden visit to the Gulf powerhouse, brightening prospects for enhanced Saudi investments into the infrastructure sector of the world’s fastest growing economy.
Announcing the $2 trillion Public Investment Fund, Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman, also known as MBS, underlined that the fund is part of the larger strategic design to diversify his country’s oil-dependent economy and make it investment-driven. This paradigm shift has been triggered by the colossal loss of around $100 billion loss in revenue to the Saudi exchequer due to oil prices plumbing to a new low in the last year or so.
The mega fund, which will form the lynchpin for post-oil Saudi economy, entails partial privatization of Saudi oil giant Aramco and transform it into a multi-faceted industrial conglomerate, with diverse business interests. “What is left now is to diversify investments. So within 20 years, we will be an economy or state that does not depend mainly on oil,” Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman, also the country’s defence minister, told Bloomberg in an interview.
What’s in it for India?
India will be looking closely at how this $2 trillion fund shapes up as Prime Minister Modi touched down in Riyadh for a two-day visit on April 2, which will focus on, among other things, transforming the economic relationship between the two countries. With Mr Modi looking to remake India through enhanced foreign investment, he is expected to enlist a more proactive involvement of Saudi Arabia in the infrastructural transformation of India. The prime minister is going to focus on enhanced Saudi investments in his interaction with the top Saudi leadership as well as in his interaction with business leaders. Mr Modi will address top Saudi and Indian businessmen at the Council of Saudi Chambers in Riyadh on April 3.
Deputy Crown Prince has already stressed that Aramco would make investments in India. The public fund opens up new opportunities for fresh Saudi investment into India. In this context, the planned King Abdullah Economic City could offer new opportunities for India to expand its economic footprints in the Gulf region as well as to leverage it to expand trade and investment with the African continent. India is working on a long-term plan to expand Saudi investments into India, and bring them on a par with UAE, with which India launched $750 million Infrastructure Investment Fund last year during Modi’s visit to that country.
Currently, bilateral trade between India and KSA is around $40 billion, which is largely made up of Saudi oil imports, but there is clearly potential for more diversified trade basket. Saudi Arabia is the fifth largest market in the world for Indian exports. India is the fifth largest market for Saudi Arabia’s exports.
With the focus on galvanizing the economic relationship, Mr Modi will be visiting two leading Indian companies invested in Saudi Arabia – L&T and TCS. “There will be occasions to request for greater involvement of our companies in Saudi infrastructure projects. Saudis are undertaking almost USD one trillion of infrastructure projects for the next five years and we will request Saudis to look at the competence of Indian companies in this regard,” said Mridul Kumar, joint secretary in charge of the Gulf region in India’s external affairs ministry.
(Manish Chand is Editor-in-Chief of India Writes Network, www.indiawrites.org, an e-magazine-journal focused on international affairs, and CEO of TGII Media Private Limited. He is in Riyadh to report and analyse India’s Prime Minister Narendra Modi’s visit to Saudi Arabia)
- Manish Chand is Founder-CEO and Editor-in-Chief of India Writes Network (www.indiawrites.org) and India and World, a pioneering magazine focused on international affairs. He is CEO/Director of TGII Media Private Limited, an India-based media, publishing, research and consultancy company.
- India and the World2021.12.21India-Vietnam ties remain a constant in a changing world: Vietnam Speaker Hue
- India and the World2021.12.12Imposing CAATSA sanctions will only benefit China, Russia: Mukesh Aghi
- India and the World2021.12.07With rifle deal and S-400 delivery, India- Russia ties soar higher
- India and the World2021.11.29India, Italy share same concerns on Afghanistan, terror: Envoy