Gulf Qatar rift: How the crisis will affect India; here’s all you need to know

Gulf Qatar rift: India has termed the development as internal matter of Gulf Cooperation Council (GCC).

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India-Qatar cooperation extends to diverse sectors aided by historically close ties and substantive engagement. (Image: IE)

Gulf Qatar rift: Saudi Arabia and other Arab countries have cut all diplomatic ties with Qatar in a move to isolate the nation. India has termed the development 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 bearing on India-Qatar relationship. The inflow of Qatari 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. Meanwhile, oil prices have fallen for the third day. While the rift will certainly have impact on Gulf states and the whole Middle East, here is a perspective on how the developments will affect India-Qatar ties as well as diplomatic relations with other involved countries.

India-Qatar Bilateral trade

The Bilateral trade between India and Qatar has seen it all. It had touched a high of $ 16.68 billion in 2013-14, and fell to $ 9.93 billion in the 2015-16 fiscal.  India’s exports have hovered in the range of $ 900 million to $ 1,000 million. Imports in value terms have declined sharply in the last 1-2 years due to the decrease in international oil and gas prices, according to IE reports.  The balance of trade is currently tilted in Qatar’s favour. With India needing a whopping  $ 1 trillion in the next 5 years in infra alone, Qatar Investment Authority (QIA) can invest heavily in this sector. India has made efforts to actively engage with QIA and other state-owned and private entities in Qatar, highlighting policies such as ‘Make in India’ and the advantages of investing in India.

Worry for India’s corporate sector

The Gulf-Qatar rift will send a caution message to corporate sector in india. The corporates has increased their businesses in Qatar and are looking forward to the vast potential in that country. A number of reputed Indian companies, particularly in construction/infrastructure and IT, have operations in Qatar, including L&T, Punj Lloyd, Shapoorji Pallonji, Voltas, Simplex, TCS, Wipro, MahindraTech, HCL, 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, according to IE report.

India-Qatar Bilateral Relations

India-Qatar cooperation extends to diverse sectors aided by historically close ties and substantive engagement. PM 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 paid a state visit to India in March 2015. Even his father had visited India several times. Over the past three years, PM Modi has visited UAE, Saudi Arabia, Iran and Qatar. Notably, UAE’s Crown Prince visited India as the chief guest for the Republic Day celebrations this year. PM Modi hosted the Palestinian President last month. The Prime Minister will visit Israel early next month.

India has major military relations with Qatar, where they have a maritime defence agreement to suppress 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. Indian contractors Larsen & Turbo (L&T) in March 2014 won a QR 2.1 billion road project in Qatar. It also secured a $740 million order from Qatar Railways Co for the design and construction of the rail line for the Doha Metro project in Qatar.

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Fuel supplies:

India’s Petronet has said that it did not expect any impact on gas supplies from Qatar after the recent developments. R.K. Garg, head of finance at Petronet, told Reuters, “I don’t think there will be any impact on it. We get gas directly from Qatar by sea.” Petronet LNG, India’s biggest gas importer, 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. Meanwhile, oil prices have jumped after the Arab countries decided to snap ties with Qatar.

India diaspora:

The community of Indians in Qatar includes Indian expatriates in Qatar, as well as people born in Qatar of Indian origin. The Indian population in the country currently stands at around 650,000. Travel for Indians to Qatar is unlikely to be affected as flights from India take the Persian Gulf route to Doha. 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, which also has a sizeable population of Indians, may be difficult as it has joined Saudi Arabia, Egypt and Bahrain in denying airspace to Doha.

Also read | Saudi Arabia, UAE, Egypt, Bahrain cut ties with Qatar; 10 things to know about the dispute

Whose side will India take?

India does not need to take sides in the recent conflict, as the dispute mostly relates to intra-GCC dynamics and geopolitics over Qatar’s support of Muslim Brotherhood and alleged support to the Islamic State and al-Qaeda. 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. Meanwhile, Qatar is the biggest supplier of liquefied natural gas (LNG) and a major seller of condensate – a low-density liquid fuel and refining product derived from natural gas. So, India needs to have a balanced stance for the time being unless Indians living in Qatar are affected in a major way.

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