Prime Minister Narendra Modi’s recent state visit to Kuwait on December 21-22, 2024, marked an extremely significant moment in the annals of India-Kuwait relations, elevating the bilateral engagement to a Strategic Partnership. This was the first state visit to Kuwait by an Indian leader in 43 years.
The symbiotic relationship between India and Kuwait is anchored in centuries-old trade and cultural exchanges. Historically, the Indian subcontinent and the Arabian Peninsula have been intertwined through maritime trade routes, facilitating the exchange of goods, ideas, and culture. In contemporary times, this relationship has matured into a robust economic partnership, with bilateral trade reaching approximately US$ 10.47 billion in the fiscal year 2023-24. This figure reflects a significant increase from previous years, indicating a dynamic and mutually beneficial trade relationship. It is worthwhile to glance at the trend of bilateral trade during the years 2019-20 to 2023-24.
(Value is US$ million)
The given data chronicles the vicissitudes of the bilateral trade between the two nations over the given fiscal years, offering a compelling narrative of shifting economic paradigms and evolving trade dynamics as also mentioned earlier. A meticulous analysis reveals noteworthy trends and underlying economic forces shaping this trajectory.
India’s exports to Kuwait exhibit a commendable upward trajectory, expanding from US$ 1.28 billion in 2019-20 to a robust US$ 2.1 billion in 2023-24. This 63.5% growth over five years exhibits India’s burgeoning export capacity and its ability to cater to Kuwait’s diverse needs. The pronounced surge, particularly between 2022-23 and 2023-24, is likely indicative of strengthened bilateral agreements, diversification of export commodities, and enhanced competitiveness of Indian goods in the Kuwaiti market.
This ascent also mirrors India’s strategic focus on expanding its footprint in the Gulf Cooperation Council (GCC) economies, leveraging its industrial and manufacturing sectors to bolster trade.
In contrast, India’s imports from Kuwait paint a more fluctuating picture, peaking dramatically at US$ 12.24 billion in 2022-23 before plummeting to US$ 8.37 billion in 2023-24. This oscillation can be attributed to the predominance of hydrocarbons in Kuwait’s export portfolio to India, which is inherently susceptible to the fluctuations of global crude oil prices and demand dynamics.
The sharp decline in 2023-24 could also signify India’s gradual pivot towards energy diversification, aligning with its renewable energy aspirations and reduced reliance on traditional fossil fuel imports.
The total trade value reveals a similar tale of crests and troughs, with figures oscillating from a nadir of US$ 6.26 billion in 2020-21, reflective of the pandemic-induced economic contraction, to a zenith of US$ 13.8 billion in 2022-23. This peak can be ascribed to a confluence of high global oil prices, post-pandemic economic recovery, and robust demand.
However, the subsequent decline to US$ 10.47 billion in 2023-24 raises pertinent questions about the sustainability of the trade relationship. It suggests a recalibration of economic priorities, possibly driven by India’s evolving trade strategy and global economic uncertainties.
The trade dynamics between India and Kuwait are characterised by a diverse array of imports and exports. Kuwait stands as one of India’s principal suppliers of crude oil, fulfilling about 3% of India’s energy requirements. This energy partnership is significant, given the continuous surge in India’s energy demands driven by its rapid economic growth. The export portfolio encompasses a wide range of products, including machinery, textiles, food items, and pharmaceuticals, highlighting India’s diversified industrial base. The Kuwait Investment Authority has demonstrated a growing interest in the Indian market, with investments exceeding US$ 10 billion. These investments span various sectors such as technology, tourism, healthcare, and logistics, reflecting Kuwait’s confidence in India’s economic trajectory.
The elevation of bilateral relations to a Strategic Partnership during PM Modi’s visit signifies a commitment to deepening cooperation across multiple domains. A memorandum of understanding (MoU) on defence cooperation was signed, aiming to institutionalise collaboration in areas including joint military exercises, training, and defence technology. This development is poised to enhance security ties and foster greater strategic alignment.
The renewal of the Cultural Exchange Programme for 2025-2029 and the introduction of an executive programme in sports for 2025-2028 show a mutual commitment to strengthening people-to-people connections. These initiatives are expected to facilitate greater cultural exchanges and collaboration in education and sports.
Kuwait’s accession to the International Solar Alliance (ISA) marks a significant step towards collaborative efforts in developing and deploying sustainable energy solutions. This move aligns with global efforts to transition towards cleaner energy sources and reflects a shared commitment to addressing climate change.
The deepening of India-Kuwait relations holds substantial economic promise. Both nations have expressed a desire to diversify their trade portfolios. For India, this could mean increased exports of technology and services, while Kuwait may explore opportunities in sectors beyond hydrocarbons, such as renewable energy and infrastructure development. The strategic partnership is expected to create a more conducive environment for investments, encouraging Kuwaiti investments in India’s rising sectors and vice versa. This mutual investment is anticipated to spur economic growth and job creation in both countries. Discussions on increasing bilateral flight capacities and improving logistics are likely to facilitate smoother business operations and boost tourism, further strengthening economic ties.
The recent advancements in India-Kuwait relations, epitomised by the Indian PM’s state visit, herald a new era of strategic collaboration. The reinforced bilateral trade relations, underpinned by historical ties and shared strategic interests, are poised to yield substantial economic benefits and contribute to regional stability. As both nations navigate the complexities of the global economic landscape, their strengthened partnership serves as a testament to the enduring power of diplomacy and mutual respect.