Policy Update
Bhavana Girase
Background
India-Saudi Arabia share a history of deep economic, cultural and strategic ties. In recent decades, these have been strengthened by high-level exchanges and bilateral agreements. Both countries are committed to a relationship that leverages their respective strengths. The Delhi Declaration in 2006 and the Riyadh Declaration in 2010 were two initiatives that built a foundation for cooperation, especially in energy. Since then, the relationship expanded significantly through visits by Indian Prime Minister Narendra Modi and Crown Prince Mohammad bin Salman of Saudi Arabia, which eventually led to the formation of the Strategic Partnership Council (SPC) in 2019.
This helped sustain momentum and established a formal mechanism for structured engagement, given that both India and Saudi Arabia share similar ambitions in clean energy. India aims to install 500 GW of renewable energy capacity by 2030 and expects to emerge as the global leader in green hydrogen, while Saudi Arabia has its Vision 2030 strategy to generate 50% of its generated electricity from renewables, simultaneously reducing its economy’s dependence on oil and investing heavily in clean energy technologies. The collaboration gained further momentum during the Middle East and North Africa (MENA) Climate Week 2023 in Riyadh, where several MoUs with respect to green hydrogen, renewable energy and supply chain resilience were signed by both nations, which is a notable step in bilateral energy cooperation.
Functioning
The India–Saudi Arabia renewable energy partnership has grown through a framework of bilateral agreements, joint ventures and investment partnerships that is evolving since 2019.
In 2019, the countries signed important MoUs to enhance cooperation in renewable energy and a commitment to reach 40% of India’s installed capacity from non-fossil fuel sources by 2030. These paved the way for public and private investment and joint projects from a joint investment fund of $100 million allocated to support joint projects by India and Saudi Arabia.
During the October 2023 meeting , Saudi Investment Minister Khalid Al-Falih and Indian Union Power Minister R.K. Singh discussed opportunities for investment in solar, wind, green hydrogen and power transmission, wherein INVEST India highlighted opportunities to attract Saudi capital investment into India’s renewable energy sector.
The signing of a historic MoU in January 2023 enabled collaboration on electrical interconnection, creation of an electrical exchange during peak demand and again co-production of green hydrogen and security of supply, energy security and continual ongoing resilience planning for supply chains and access to Saudi Arabia’s energy supply.
In May 2025, India accelerated cooperation by granting Saudi Arabia’s Public Investment Fund (PIF) an exemption from foreign portfolio investment limits and allowing it to grow its holdings in Indian energy companies.
This broad engagement, covering policy, investment and technology, reflects the deepening partnership.
Performance
Saudi Arabia is India’s fifth largest trading partner, while India is the second largest trading partner for the Kingdom of Saudi Arabia for the FY 2023-24.
Economic ties between India and Saudi Arabia have grown substantially, with bilateral trade standing at US$43 billion in 2023–24, a decline from US$53 billion in 2022–23.
Over 2,700 Indian companies operate in Saudi Arabia, including notable firms like L&T, TATA, Wipro, TCS, TCIL and Shapoorji Pallonji, which have invested around US$2b. Saudi investments in India are at US$3.22 billion (April 2000–June 2024), with major investments from ARAMCO, SABIC, ZAMIL and Al Batterjee Group.
India imported 33.35 MMT of crude oil in FY 2023–24, with India continuing to work to reduce its fossil fuel energy dependence through large-scale solar power and wind energy expansion. Saudi Arabia is still India’s third largest supplier of crude oil and LPG, though both countries are working to expand cooperation beyond hydrocarbons.
It should be noted that Saudi Arabia’s Public Investment Fund (PIF) has more than US$10 billion in investments in India currently, including investments in Reliance Jio, Reliance Retail, Daawat Foods and HealthifyMe. Cooperation on clean energy is rapidly evolving – Alfanar Energy has invested US$700 million in solar and wind generation projects in Gujarat.
Impact
1. Expanded Strategic Partnership—The formal establishment of the Strategic Partnership Council in 2019 and regular high-level ministerial visits have established a framework for long-term and lasting cooperation.
2. Large Investments from Saudi Arabia to India—Recently more than US$10 billion has been invested, which includes Public Investment Fund (PIF) capital through stakes in Reliance Jio, Reliance Retail, HealthifyMe and Daawat Foods.
3. Growing Presence of Indian Companies in Saudi Arabia —Contributing nearly US$2 billion to various sectors including IT, infrastructure and energy.
4. Collaboration in the Energy Sector—Saudi company Alfanar Energy invested US$700 million in renewable energy projects in Gujarat and Rajasthan and Indian EPC companies are providing support for Saudi Arabia’s National Renewable Energy Program (NREP).
5. Important MoUs signed in 2023—Signed cooperation on green hydrogen, electrical interconnection and supply chains during MENA Climate Week 2023 in Riyadh.
6. Cultural Diplomacy and Soft Power have grown through people-to-people initiatives such as Yoga Diplomacy, Pravasi Parichay and artistic collaborations.
Emerging Issues
1. Trade Volatility–As a result of shifting market uncertainties and supply chain disruptions, bilateral trade has decreased from US$53 billion in 2022–2023 to US$43 billion in 2023–2024.
2. Dependency on Fossil Fuels–India still imports more than 33 million metric tons of crude oil from Saudi Arabia, which makes the transition to clean energy more difficult.
3. Regulatory & Investment Challenges–Deeper private sector collaboration may be impeded by disparities in regulatory environments and investment processes.
4. Impact of Implementation Gap–Signed Memorandums of Understanding that are not implemented promptly continue to be a major bottleneck, slowing progress and increasing the chance of missed opportunities.
Way Forward
Now, the emphasis is on actual implementation, with time-bound action plans, quantifiable goals and systems for routine monitoring, rather than just signing memorandums of understanding–India and Saudi Arabia must make sure that agreements on power interconnection, green hydrogen and renewable energy are implemented through real investments and on-the-ground projects. Stronger institutional support will be needed to make this change, especially from groups like the High-Level Task Force on Investment and the Strategic Partnership Council. Even though this shift will take time, advancements in the business-to-business (B2B) space will be crucial. Intent to action will be facilitated by increased business-to-business interaction, streamlined regulations and collaborative development of clean technologies and robust supply chains–Beyond energy, there are new prospects for cooperation in storage solutions and critical minerals.
Conclusion
With economic cooperation and energy security at the core of their relationship, India and Saudi Arabia have evolved from close partners to strategic allies. The true test will be dependent on both the nations fulfilling their commitments on time and consistently as they strive for sustainable growth. Maintaining momentum will require high-level involvement, the private sector’s active participation and collaborative innovation. If this partnership is pursued with purpose and determination, it has the potential to become a model for achieving tangible results in energy security, economic resilience and climate action–as well as a model for how common goals can lead to long-term global impact.
References
1. India-Saudi Council. India-Saudi Arabia: A decade of strategic partnership. https://www.indiasaudi.org/articles/india-saudi-10years
2. India Brand Equity Foundation. Promoting investment in new renewable energy between India and Saudi Arabia. https://www.ibef.org/news/india-and-saudi-arabia-have-decided-to-promote-investment-in-the-new-renewable-energy
3. IndBiz. Exploring new avenues for trade and investment growth with Saudi Arabia. https://indbiz.gov.in/india-saudi-arabia-explore-new-avenues-for-trade-and-investment-growth/
4. Press Information Bureau. India-Saudi Arabia relations: Key updates and press releases. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1966200
5. India Brand Equity Foundation. Overview of trade between India and Saudi Arabia. https://www.ibef.org/indian-exports/india-saudi-arabia-trade
6. Ministry of External Affairs. India-Saudi Arabia bilateral relations: Official document. https://www.mea.gov.in/Portal/ForeignRelation/India-Saudi_Arabia.pdf
7. Press Information Bureau. Bilateral cooperation updates between India and Saudi Arabia. https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2038188
8. Press Information Bureau. Investment and trade relations: India-Saudi Arabia. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2123722
About the Contributor
Bhavana Girase is a Research Intern at Impact and Policy Research Institute (IMPRI). A data and policy research enthusiast, with a background in UPSC preparation and focusing on turning complex data into interpretative insights for a better understanding of policies.
Acknowledgement
The author sincerely thanks Ms.Aasthaba Jadeja and the IMPRI team for their valuable support and guidance.
Disclaimer
All views expressed in the article belong solely to the author and not necessarily to the organisation.
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