Why are Saudi Investors Betting Big on India?

India and Saudi Arabia rejoice in a friendly equation that reflects century-old economic and socio-cultural ties. Factors like closer geographical proximity, natural synergies, cultural affinity, and similar challenges and opportunities have added incentive to this strong setup. Saudi Arabia is India’s 4th largest trade partner and a major source of energy, as India imports 18% of its crude oil from Saudi Arabia. Likewise, the largest GCC nation constitutes 22% of the overall LPG requirement of India. India-KSA bilateral trade has reached USD 42 billion annually making the Kingdom the biggest trade partner of India after USA, China, and UAE.

The relationship between India and KSA has also received a positive thrust in the wake of PM Modi and King Salman’s higher-level visits. In 2016 and 2019, PM Modi made state-level visits in the Kingdom, while crown prince Salman has also visited India in 2019.

The cooperation between India and KSA is now moving beyond the hydrocarbon energy or India’s IT and construction companies operating in the Kingdom. They are seeking active participation in numerous categories such as ICT, BFSI, textile, automobiles & automotive systems, food packaging, petrochemicals, chemicals & fertilizers, retail, etc. Likewise, there is also tremendous potential in pharma, renewable energy, construction materials, ceramics, etc.

KSA becoming a major FDI source for India

Not just a reliable trading partner, but KSA is also becoming an active source of FDI for India. In FY 21, Saudi investments in India amounted to USD 2.8 billion, a monumental shift from the previous year, when it was USD 90 million. As per the sovereign and governing agencies of the Kingdom, Saudi Arabia is set to invest more USD 100 billion in the coming years.

Saudi Arabia’s Public Investment Fund is en route to meeting its $480 billion target of assets under management for the 2nd quarter, as per the fund’s governor, Yasir al-Rumayyan. The PIF plans to achieve the ambitious goal of an average of $1.07 trillion of assets under management by 2025 and $2 trillion in 2030. Well-planned investments in technology companies, many of which relish booming stock prices since COVID-19, can aid these growth targets. India being party to one of the biigest tech and start-up ecosystems in the world, is high up on the agenda of PIF. Already Saudi investors have bet big on tech companies in India such as HealthyfyME and Reliance Jio network.

The PIF plays a crucial interest in global technology investments with its enormous $45 billion bond to the SoftBank Vision Fund, which happens to be the globe’s largest technology investment fund, in 2018. The Saudi fund’s plan for 2021-25 reasserts the importance of local and international technology companies in its investment portfolio. This indeed is positive news for India, which has 3rd largest number of start-ups after USA and China.

Meanwhile, Saudi Arabia is actively looking to India to manage its food dependency. India is home to one of the biggest dairy, cereals, animal husbandry, fishing, fruits & vegetable markets in the world. This makes India a natural ally in Saudi’s own quest to enhance and strengthen its food supply lines.  Directly owning farmland is not permissible in India. So, the Saudi companies and investors are making strategic investments in Indian food manufacturers, suppliers, and agribusinesses. The trend will further grow in the foreseeable future with an increase in greenfield and brownfield investments in the Indian food industries.

All these factors signify that Saudi Arabia has a huge potential in India and the businesses we run, leading them to invest in the Indian market. Meanwhile, India is also a diversified, complex, and multifaceted market. To start and run a successful business requires incessant access to valuable data, information, and insights. Ranging from consumer behavior to market growth statistics & market share analysis to distribution structures & retail roadmaps to regulatory inputs and much more, international companies need data & inputs to grow in India.

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