Enhanced strategic ties and defence cooperation will encourage Indians and Saudis to boost two-way investments, which are currently far below the potential, the Saudi-India business council chief has said, adding that the kingdom's economy is "dependent on Indian workers".
"Improvements in strategic and political relations have positive impacts on businesses. The defence cooperation will have a big positive impact on investments and trade," said Kamel S. Almunajjed, chairman of the Saudi-India Joint Business Council, told IANS in an interview.
India and Saudi Arabia signed a memorandum of understanding on defence cooperation during the official visit of the oil-rich Gulf kingdom's Crown Prince Salman bin Abdulaziz Al Saud here last week.
Almunajjed, who headed the business delegation accompanying the crown prince, said several big-ticket investments are lined up and the defence cooperation would boost investors' confidence.
"Very soon you are going to see a total change in attitude from both sides," Almunajjed said, adding Saudi investors see India as a high growth potential market and several big firms are exploring their options in sectors like energy, healthcare and infrastructure.
He said Saudi investors would prefer putting their money in growth markets like India to the Western countries like the US or those in Europe that are stagnating and facing economic challenges on several fronts. "We prefer to invest in a booming economy and not in a receding economy."
He pointed out that major Indian companies, including Larsen & Toubro and Tata Consultancy Services have made significant investments in Saudi Arabia. Tata Motors plans to set up a manufacturing unit in the kingdom for the Jaguar Land Rover luxury range with an investment of 100 million pounds ($167.4 million/Rs.10.35 billion).
The Saudi Arabian General Investment Authority issued 426 licences to Indian companies between January 2006 and December 2010 for joint ventures and 100 percent owned entities. It is expected to result in Indian investments of $1.62 billion in Saudi Arabia.
On Saudi investments in India, Almunajjed said the figures are under-reported because most of the money flow comes via Mauritius and Dubai.
According to data available with India's external affairs ministry, the total Saudi investments in India was $41.08 million between April 2000 and September 2013.
"These statistics are wrong. Our embassy here is doing one study. So far they are able to count over $1 billion of Saudi investments in India. Most of them are done in the name of companies from Mauritius and Dubai," Almunajjed said.
He said the Saudi-India Joint Business Council, in partnership with the Federation of Indian Chambers of Commerce and Industry (FICCI), plans to set up an advisory body to facilitate and promote two-way investments.
On Saudi Arabia's new "Nitaqat" labour policy that saw some 140,000 Indian expatriates returning home, Almunajjed said only those working illegally were affected.
More than half of nearly 2.8 million Indian workers in the kingdom were affected by the new labour policy. Nearly 1.4 million Indian workers were regularised while some 140,000 had to return home mainly due to insufficient documents and work permits.
Almunajjed claimed the Nitaqat policy had made the kingdom a better place to work for genuine expatriates.
He said Saudi economy is heavily dependent on Indian workers and the government cannot afford to have a policy that hinder the flow of the required workforce. "Most of the companies in Saudi cannot function without Indian workers. The whole economy is so dependent on Indian workers," he said.
"Indian community in Saudi is among the most peaceful. In terms of crime, there is hardly any. They don't interfere in local issues. Saudi government and businesses recognise these facts, and value Indian workers," he said.