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Trade relations between Saudi Arabia and India


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Trade relations between Saudi Arabia and India

  1. 1. INTRODUCTIONWhat is trade?Trade refers to the exchange ofgoods and services. It may beinternal or external.What is International trade?It refers to the exchange of goodsand services among differentcountries.
  2. 2. Major exports: Petroleum oils, crude (77%) Petroleumoils, refined (6%) Polymers of ethylene,in primary forms(3%) Petroleum gases (2%) Acyclic alcohols(2%)
  3. 3. Major imports: Cars(7%) Medicaments, packaged(3%) Iron ores and concentrates(2%) Automatic data processing machines(2%) Transmission apparatus forradio, telephone and TV(2%)
  4. 4. Major trade partners(exports):Asia, NES (37%)North and Central America (8%)Japan (7%)China (7%)United States (7%)
  5. 5. Major trade partners(imports): China(14%) Germany(10%) Japan(9%) Korea Republic(6%) United States(6%)
  6. 6. Saudi is an oil-based economy.Strong government control over economicactivities.18% of world’s petroleum reserves.Largest exporter of petroleum.
  7. 7. INDIA’S ECONOMYMajor exports: Petroleum oils, refined (15%) Diamonds(11%) Iron ores and concentrates(4%) Jewellery of precious metals(3%) Medicaments, packaged(3%)
  8. 8. Major imports: Petroleum oils, crude(21%) Diamonds(9%) Coal; briquettes(5%) Gold(5%) Petroleum oils, refined(2%)
  9. 9. Major trade partners(exports): United States(12%) United Arab Emirates(11%) China(8%) Hong kong(4%) Singapore(4%)
  10. 10. Major trade partners(imports): China(12%) United Arab Emirates(8%) United States(5%) Australia(5%) Saudi Arabia(5%)
  11. 11.  Since liberalization, the value of India’sinternational trade has increased;GDPrising from 16% in 1990-91 to 47% in 2008-010. By 2010, exports increased to 22.3% , whileimports increased by 7.5%.
  12. 12. HISTORY India and Saudi share a BILATERALrelationship. Trade between the two countries dates backto third millennium B.C. Arab traders held a monopoly over ‘spicetrade’ between India and Europe. Since its independence, India has sought tomaintain strong ties with Saudi Arabia.
  13. 13. Bilateral InvestmentProgressive growth has been observed between thecountries after Liberalization policy of India in 1991.Saudi Arabia is ranked 15th position in country-wiseFDI joint venture in India and 2nd among Arabcountries. Saudi Arabia has invested 422.1 million INR during1991 to 99 and 690.71 million INR during Jan 2000 to08Investment is observed in diverse fields such as papermanufacture, chemicals, computer software ..etc
  14. 14. India is the sixth biggest foreign investor in theKingdom with investments exceeding US $470 millionin nearly 100 joint ventures or 100 % Indian ownedcounties in Saudi Arabia in sectors such asPower, Construction, IT and many others…Saudi Arabia invited Indian businessmen to invest inspecial areas of telecommunication, mining, energyand power, agriculture..etc
  15. 15. Trade agreements & Associations.
  16. 16. A trade agreement ( Trade Pack) is a wide rangingtax, tariff and trade pact often includes investmentguarantees.In order to improve trade relations between India &Saudi Arabia on March 1, 2010 signed 5 important tradeagreements.
  17. 17. Extradition treatyAgreement on the transfer of sentencedpersonsAgreement on Scientific co-operationMemorandum of Understanding(MOU) between Indian Space ResearchOrganization (ISRO)MOU on co-operation in science andtechnology for joint research anddevelopmentMOU on Cultural co-operation
  18. 18. Non-Governmental and other agreements include: MOU for foreign office consultationsBilateral promotion and protection investments(BIPA)Agreement on avoidance of double taxation
  19. 19. Trade AssociationsTrade associations, also known as an industry tradegroup or business association is an organizationfounded and funded by businesses that operate in aspecific industry.Some of the trade associations which are established arebetween the two countries area) Association of Malyali Professionals in Saudi Arabia(2004)b) ‘‘Pleace India’’ (non-profitable, non-politicalmovement)
  20. 20. Exports and ImportsSaudi Arabia is the 4th largest trading partner for India.The value of the two-way trade between the twocountries in 2011-12 exceeded US $36 billion. SaudiArabia is the 14th largest market in the world for Indianexports and is the destination of more then 1.86% in theglobal exports.On the other hand Saudi Arabia is the source of 6.35% ofIndia’s Global imports.For Saudi Arabia India is the 5th largest market for itsexports accounting for 7.55% of its global exports.
  21. 21. India’s imports and exports with Saudi Arabia.050001000015000200002500030000 2000-012001-022002-032003-042004-052005-062006-072007-082008-092009-102010-11(Apr-Sep)India’s Imports fromSaudi ArabiaIndia’s Exports to Saudi Arabia
  22. 22. Major Indian Exports to SaudiMineral FuelsMineral OilsCerealsNuclear reactorsBoilersElectrical Machinery & equipmentIron & steels
  23. 23. India’s Major Imports from SaudiOrganic ChemicalsPlastic and its articlesInorganic chemicalsFertilizersAluminumIron and SteelCopper
  24. 24. Balance of TradeWhat is Balance of trade??Balance of Trade of the difference between a country’simports and its exports.i.e, Exports ImportsWhat is Trade Deficit?A country has a trade deficit if it imports more than itsexports. i.e, Imports ≥ ExportsWhat is Trade Surplus?A country has a trade surplus if it exports more than itsimports. i.e, Exports ≥ Imports
  25. 25. -18000-16000-14000-12000-10000-8000-6000-4000-200002000Balance of TradeBalance of Trade
  26. 26. Balance of PaymentWhat is balance of Payment?It is a record of all the transactions made between oneparticular country and all other countries during thespecified period of time.
  27. 27. Current account balance inSaudi Arabia
  28. 28. Current account balance INIndia.
  29. 29. ConclusionThe frequency of high-level official exchange must beimproved so that political understanding improves.Both sides must show eagerness to open more areas forco-operation.High-Level military exchanges, joint training of trrops& high use of training courses must be encouraged.Both sides should refrain from taking steps that couldharm the interests of the other sides.