The Crown Prince of Saudi Arabia Mohammad bin Salman began his India visit in the shadow of one of the worst terror attacks of recent times that saw over 40 CRPF soldiers being killed in Pulwama, Jammu and Kashmir. Given the close ties Saudi has with Pakistan, the country that is known to be sheltering the alleged masterminds of the attack, there is a general concern over its possible impact on the bilateral India-Saudi talks.
In an interview with Business Today, Kamel Al-Munajjed, Chairman of the Saudi Indian Business Council, and the head of a 50-member CEO delegation that is accompanying Prince Salman, dismisses such fear. Saudi's stand on terrorism is very clear, so are its plans for bilateral tie-ups on business and economic matters, he says. Al-Munajjed is the Managing Partner of Urjuan Property Developers, which is active in the real estate development and construction in Saudi Arabia, and Director of Span Arabia, a leader in the logistics supply across the Gulf region.
Business Today: What could be the impact of the terror attack on the India-Saudi bilateral talks?
Kamel Al-Munajjed: The terrorist action happened on Thursday evening, and you know Thursday evening is weekend in Saudi. It was the first time in my life I saw an official Saudi press release coming out at 6 in the morning on Friday (a holiday). It expressed the Kingdom of Saudi Arabia's strong condemnation over the terror attack. The Kingdom rejected the cowardly terrorist act and stood by India in its action against terrorism and extremism.
BT: Given Saudi's proximity to Pakistan will this unfortunate incident affect the prospects of better economic cooperation with India?
Al-Munajjed: I don't think anything should be affected because of a small minority whose intent is to harm. We have rejected them totally. Now, if we start rejecting India or rejecting any other country because of this, we are going to be seen as weak. We have to be stronger than them (the extremists) and make our relations with (India) even better. This is my personal opinion.
BT: How big is the delegation?
Al-Munajjed: We are around 50 CEOs (of private companies). In addition, the heads of the biggest governmental groups like ARAMCO (Saudi's national petroleum and natural gas company) and the head of SABIC (petrochemical manufacturing giant) are here.
BT: Which are the key focus areas and what are the expected outcomes?
Al-Munajjed: The companies are mostly representing sectors like energy, petrochemicals, food, construction, IT etc. The importance of this visit, in my opinion, the single most important agreement that we are going to sign, will be the establishment of the high cooperation council, which will be headed by the Crown Prince on the Saudi side and the Prime Minister Narendra Modi on the Indian side.
With this, you are going to have direct contact between the two countries. For Saudi Arabia, this type of high cooperation council exists with only US and China. India is the third country. It shows the importance we give to these countries.
BT: What does this mean for the businesses on both sides? The bilateral investments have not been very high so far?
Al-Munajjed: If you look at the statistics here, they will tell you that there are only 50 Saudi companies and an investment of $80 million in India. But SABIC alone has a research centre in Bangalore, with an investment of $200 million. They have hired 300 Indian engineers there. If this Ratnagiri project (setting up of a green field petrochemicals complex and integrated oil refinery) works out; on the Saudi side it's all approved and ARAMCO has the $12 billion ready, now it is Indian turn. I am sure it will work because it is mutually beneficial. It is our strategy to access external markets, and it satisfies the Indian need for energy security.
We also know there will be a memorandum of understanding signed on National Infrastructure Investment Fund here. Saudi is going to invite Indian companies to participate in the renewable energy development. We are running at around 60 GW in Saudi, we believe we are going to reach 200GW in the next few years, it's going to be huge demand and oil cannot satisfy that and India has proven to be a great place for renewables. There are lot of similarities (in India's and Saudi's vision for economic development).
We have our vision 2030, and India has its vision 2030. We both have a young population, we both have a problem in employment, we both want a clean environment and we both are trying to use technology to create employment. There could be so many joint ventures in the petrochemical sector. You have the knowledge, we have the raw material. So whatever aspects you think of, it's a win-win situation. Even on security and anti-terrorism front, it is a full complementary relationship.
BT: The bilateral trade numbers do not show the same enthusiasm. Why?
Al-Munajjed: Bilateral trade was high when oil price was at $120 (a barrel), now it is $50. This is not important. What you should look at is the composition of the trade. When we reached $45 billion, it was $35 billion of oil and $10 billion of non-oil; out of this $10 billion, $3 billion going to Saudi, and $7 billion to India. I expect that in 2018 we are close to $32 billion, which is a 10 per cent increase in bilateral trade over the last year. The non-oil component of this is almost 30 per cent now. Then there are in-direct exports too.
Officially, the biggest trade partner of India in the Middle East is UAE. Their figures for 2018 were $35 billion. What you fail to see is that UAE is a re-exporter; they get the product, re-pack and send to all of Africa, Iran, and other gulf region. About 40 to 50 per cent of all exports that go to UAE from India are re-exported into gulf countries. And 80 per cent of this 40 per cent goes to Saudi. So if you add the re-export figures of Indian goods, Saudi is the largest trading partner for India in the Middle East.
BT: But why is it happening like this?
Al-Munajjed: Because of historical reasons. We had a complicated system in Saudi Arabia and only in the last 3 years that we have started to liberalise (Saudi economy).
BT: Which are the products that we are talking about?
Al-Munajjed: The main exports of India to Saudi Arabia (export or re-export) are food products, tools, garments, etc.
BT: How robust are the medium term growth prospects in India-Saudi trade?
Al-Munajjed: We are in the $30 billion range now; we need to get back to $50 billion before 2030; that is my opinion. But more than that the composition needs to change. We are going to invite lot of Indian companies to participate in the Saudi growth phase. Today, we have eight new cities coming up from nothing. One of them is NEOM, which will be cradle of technology in the world. It is going to be a 10,000 sq km city. The whole area is going to be only innovation and technology.
We have another city called Red Sea, which will be only for resorts. A third city only for logistics. These are new cities that should create new jobs. We also unveiled a roadmap for industrialisation and infrastructure. We are going to have new airports, new roads and railways. All of this together is going to be a $1 trillion business opportunity in the next 10 years. Given your technology strengths, India will be invited to participate in NEOM for sure.
Similarly, India will be invited to participate in the renewable energy projects and the pharmaceutical projects. Already (Indian infrastructure majors like) L&T and Shapoorji Pallonji have huge projects in Saudi. Today, Tata Consultancy Services (TCS) is the largest employer of women in Riyadh. They have 1000 women in one location and they say it's going to become 3000 in the next five years.
BT: What will be the focus of India bound investments?
Al-Munajjed: India will play a major role in our food security plans. You cannot own agricultural land, but you can own the processing plants. This will be a very important key area. There is going to be a memorandum of understanding on infrastructure, and I am sure there must be others on defence and security etc.