Indian businesses invest billions in GCC

Experts disagree on the extent to which the Indian investments benefit the local economies

 Saudi Arabia hosts a meeting of foreign ministers from Iraq, Jordan, Egypt and the Gulf Cooperation Council (GCC) countries to discuss Syria's return to the Arab League in Jeddah, Saudi Arabia, April 14, 2023. (photo credit: SAUDI PRESS AGENCY/HANDOUT VIA REUTERS)
Saudi Arabia hosts a meeting of foreign ministers from Iraq, Jordan, Egypt and the Gulf Cooperation Council (GCC) countries to discuss Syria's return to the Arab League in Jeddah, Saudi Arabia, April 14, 2023.

Indian companies have become dominant in several industries throughout the Gulf Cooperation Council (GCC). According to the GCC Statistical Center, success in fields such as retail, medicine, technology, education, contracting, and tourism has allowed Indians living in the GCC to send $89 billion back to India annually, 65% of India’s total remittances.

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The nearly 9 million Indians living in GCC countries form the largest community of Indians living abroad. According to statistics released by the Indian Foreign Ministry in 2022, 3.5 million Indians live in the United Arab Emirates, 2.5 million live in Saudi Arabia, 1 million live in Kuwait, 780,000 live in Oman, 760,000 live in Qatar, and 330,000 live in Bahrain.

Religion in GCC countries

Islam is the state religion in every GCC country, but the countries allow Indians living there to establish temples and other associations. Even so, Indians living in GCC countries don’t tend to be isolated from the rest of society.

On Nov. 24, 2022, the GCC and India agreed to enter into new negotiations about a free trade pact in an attempt to strengthen cooperation between the two sides and attract joint investments.

India and the GCC signed a free trade framework agreement in 2004 and held detailed negotiations in both 2006 and 2008. Both times, the talks fell apart for a variety of reasons, including relations between the GCC and Pakistan, a country with which India has a complicated and hostile relationship.

 Gulf Cooperation Council GCC flags flying high (credit: FLICKR) Gulf Cooperation Council GCC flags flying high (credit: FLICKR)

Despite the lack of a formal free trade agreement between India and the GCC, GCC countries and India have consistently supported one another’s economies. During the COVID-19 crisis, the GCC, led by Saudi Arabia, shipped hundreds of tons of oxygen to India. When India banned wheat exports in 2022 amid the global food crisis caused by Russia’s invasion of Ukraine, it made an exception for GCC countries.

GCC countries are also benefiting from the increased development in India due to the country’s strategic development projects.

In 2019, Saudi Arabia signed infrastructure and trade agreements with India, including a plan for Saudi Arabia to invest more than $100 billion in India.

The UAE established a comprehensive economic partnership with India in February 2022. The plan is meant to increase bilateral non-oil trade to $100 billion within five years. The two countries have more than $57 billion invested in each other’s economies.

Trade between India and Kuwait amounts to about $10 billion annually, and Kuwait has $5.5 billion invested in India.

Qatar is home to about 6,000 Indian companies that have invested about $450 million in Qatar, according to data from the Qatar Investment Authority.

Trade between India and Oman reached $6.7 billion in 2022. The 6,000 Indian companies in Oman are worth $7.5 billion.

Indian investments in Bahrain are worth about $1.5 billion, and annual trade between the two countries is valued at about $1.4 billion.

Indian businessman M. A. Yusuff Ali was ranked by Forbes as the top Indian business owner in the GCC in 2021. Yusuff Ali is chair and managing director of the LuLu Group International, which operates more than 200 superstores across the GCC.

Last month, Yusuff Ali met with Bahrain's King Hamad bin Isa Al Khalifa, who commended him for the company’s support of local trade and food supply.

Khalid Abdul Rahman, a Bahraini businessman and member of the Bahrain Chamber of Commerce and Industry, told The Media Line that he expects continued growth in trade relations between GCC countries and India.

“It is true that there is competition now, but it may turn into commercial partnerships later, which achieve abundant good for various sectors and merchants,” he said.

Abdul Rahman said that the GCC is seeking increased investment from various countries, including India.

He also said that he wants workers from GCC countries themselves to work in GCC-based Indian companies. “There must be a share for the people of the Gulf in the jobs provided by Indian companies,” he said.

Emirati businessman Mohammed Odeh told The Media Line that Indian investments in GCC countries are a win-win.

“Opportunities are favorable for all merchants and businessmen,” he said. “The Gulf environment is fertile for investments, and the Gulf countries also need more employment and investments, which is a good opportunity.”

He said that India’s status as a large country with one of the world’s fastest-growing economies makes it a good partner for the GCC.

“Gulf-Indian relations extend for hundreds of years, so it is not surprising that Indian merchants are a large group in the Gulf countries,” he said.

Indian businessman Rajesh Novanthan, whose father owns one of the largest Indian hospital groups in the GCC, told The Media Line that the GCC is his family’s preferred site for investment.

“The Gulf countries depend mainly on foreign labor, so there is no problem in bringing in labor from India,” Novanthan said. “They live in peace and without any problems, and their wages are cheap and help in developing investments and providing services at competitive prices.”

Habib Tommy, a Bahraini economic journalist, told The Media Line that the situation for Indian workers in the GCC has changed significantly.

“Their wages have increased dramatically, and they have started working in more professional professions, and they are no longer only workers in cleaning and construction,” he said, noting that many Indians have taken on senior leadership positions.

“The problem is that this labor transfers more money to their countries. It is true that investments are made in the Gulf countries, but the money returns to India, and the Gulf countries benefit from it only to a small extent, given that [they do] not impose large taxes,” Tommy said.

He also raised the concern that Indian business owners operating in the GCC are more likely to form alliances with each other, rather than with local business owners.

Ragheb Mohammed, a Saudi economic analyst and journalist, expressed a similar sentiment.

“It is true that they are the majority, and they invest some money in the economy, but the sources of their money must be scrutinized, and the wealth they obtained, and where their money goes. They cannot invest here and all their money returns to their countries,” he told The Media Line. He alleged that some of the Indian business owners may have gotten their money through illegal sources.

Mohammed said that the GCC is seeing little benefit from Indian investment seeing as most jobs at the companies are given to Indian workers and the majority of money earned is transferred back to India.

“Now there are many sectors that the people of the countries in the Gulf cannot work in or invest in due to the presence of Indian businessmen,” he said.