The economic and socio-cultural ties between India and Saudi Arabia are centuries old. The bilateral strategic partnership depends to a significant extent on the economic relationship between the two countries.
Saudi Arabia is India’s fourth-largest trade partner after China, the USA, and UAE. As much as 75 percent of the Basmati rice consumed in Saudi Arabia is imported from India. The bilateral trade between the two countries was valued at the US $33.09 billion in FY 2019-20. During this period, India’s imports reached the US $26.84 billion and exports to Saudi Arabia were valued at US$ 6.25 billion, registering a growth of 12.18% as compared to 2018-19.
Rice and meat are featured among the major agri-commodities imported from India to Saudi Arabia. Other commodities that were imported from India belonged to myriad sectors such as electrical machinery and equipment, vehicles, mineral oils, organic chemicals, ceramic tiles, apparel.
Agri-trading Prospects: Saudi Arabia and India
Saudi Arabia is contemplating partnering with India to ensure food security within its territory. India has been identified as the best country to import commodities such as rice, red meat, sugar, infant milk powder, seafood, etc.
The Saudi Agricultural & Livestock Investment Company (SALIC), owned by Public Investment Fund, has recently invested $17 million to buy shares in LT Foods, which owns the Daawat brand of rice. SALIC is also in discussions with Allana Foods and contemplating investing in warehouses in SEZs to make sure that there is a cost-effective and hassle-free “field to fork” supply of agricultural products from India.
The Embassy of Saudi Arabia is working in close coordination with APEDA (Agricultural and Processed Food Products Export Development Authority), Spices Board, MPEDA (Marine Products Export Development Authority), and other such entities for steady imports of agri commodities and marine products from India.
Major Indian Agricultural Products in the Middle East
The five countries responsible for 20 percent of the total exports of principal agricultural commodities from India in 2020 were the UAE, Saudi Arabia, Iran, Iraq, and Egypt. In the financial year 2021, Saudi Arabia imported US$ 1.09 billion of agricultural products from India and was second to the UAE, which led the Middle East market and imported around US$ 1.32 billion worth of agricultural products from India.
In FY20, Saudi Arabia imported 974,122 MT of basmati rice from India valued at US$ 955.89 million. In that year, the five Middle Eastern countries – Iran, Saudi Arabia, Iraq, the UAE, and Kuwait – accounted for 70 percent of the total basmati rice imported from India. Saudi Arabia was the third-largest nation (at 9%) to import processed fruits & juices worth US$ 59.52 million from India in FY20.
In FY20, Saudi Arabia imported 597 MT of sheep/goat meat from India valued at US$ 3.93 million. The year also witnessed the five Middle Eastern countries accounting for more than 95 percent of the total sheep/goat meat imports from India.
Agricultural Commodity Market 2021
India’s agricultural products exports have registered an increasing trend in 2019-20, with the country evolving as a net exporter of agri-products since the initiation of economic reforms in 1991. India holds a leading position in the global trade of agricultural commodities and Saudi Arabia features prominently in the major export destinations along with USA, Iran, Nepal, and Bangladesh.
In the financial year 2021, agricultural exports from India were around US$ 28.49 billion, according to the Annual Report of the Directorate General of Commercial Intelligence and Statistics (DGCIS).
The market is expected to reach around US$ 60 billion by 2022 and the import of agri-commodities from the Middle East and China will be playing a pivotal role in India achieving a trade surplus in the coming years.