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Indian policy towards the Middle East represents the new pragmatism. The Middle East poses a challenge for Indian foreign policy as it has to maintain ties with two conflicting poles Arab world which is Islamic on one hand and Israel which is non-Islamic on the other. Apart from this countries like Iraq which are declared a terrorist state are also a dimension in the Indo-Middle east relations. Taking into consideration only the interest of the country India is trying to play on both sides as evident in its policy towards Israel and Iraq.
For India, its relations with the Gulf Cooperation Council (GCC) countries are equally important. In fact, the stakes are high in the Gulf, where more than six million Indians work. The GCC countries are India’s largest trade partner with trade in 2021–22 about $154.73 billion, far outstripping the financial volumes of such ties with any other region of the world. The share of GCC members in India's total imports (in 2021-22) is about 18%. GCC nations account for nearly 65% of India's annual remittances of more than 80 billion in the last three years.
On the Arab side, India’s economic links, always important, have grown in the past year and are likely to continue doing so. In the next decade, India is expected to be the source of the second-largest increase in energy demand in the world, after China. Most of its oil comes from Saudi Arabia, the U.A.E., and Kuwait. Nearly 60% of India's imports from GCC countries are crude and natural gas.
India recognizes that its energy needs will require expanded and diversified foreign sources of supply. India’s government-owned Oil and Natural Gas Corporation (ONGC) is expanding its involvement in overseas exploration and production. It has been negotiating for partnerships in Yemen, Tunisia, Iran, and Iraq, but its highest profile and most advanced operations are outside Middle East-Central Asia, Vietnam, Sakhalin Island, and Malaysia.
India has also been developing sources of natural gas supply, through LNG contracts with Qatar and others. It hopes that Bangladeshi policy will change to permit gas imports from that country. There has been much speculation about gas from Central Asia, but this would require either a pipeline through Iran or one through Afghanistan and Pakistan (see below). However, even if the diversification efforts are successful, oil will be critical to the Indian economy, and the Persian Gulf will remain India’s significant supplier of oil for a good many years to come. With a view to expand already existing good relations with Gulf region countries several high-level visits have taken place. In the recent past, several Indian Ministers i.e. EAM, MOS (EA), MOS for Small Scale Industries, MOS (Home), and MOS (Commerce) visited Gulf countries for further strengthening bilateral relations. A number of business delegations relating to trade and investment have been exchanged between India and the Gulf countries. A number of high-level visits are proposed to be exchanged later this year and in the early part of the next year.
India’s political ties to the Arab countries are not as strong as one might expect, given this level of economic interdependence. India has made some efforts to maintain its links to the Muslim world. Its voting record on Middle East questions in the United Nations is still consistently pro-Arab. But in 2021, in UNGA and UNSC, India shifted its stance slightly pro-Israel. India condemned Hamas' rocket firing into Israel and said that Israel's action was retaliatory, in self-defense.
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