Qatar and India share a dynamic trade and economic relationship, marked by a deep complementarity of interests, strong people-to-people ties, and shared aspirations for growth.
The Indian community is the strongest bridge between the two countries, strengthening social, economic, and cultural ties. The economic cooperation between Qatar and India is also growing across key sectors, especially in energy security and infrastructure development. Qatar has become a leading provider of liquefied natural gas (LNG) to India, while Indian firms have been heavily invested in infrastructure and services in Qatar.) However, trade and economic numbers are just one part of a much deeper relationship that is on shared history, cultural exchange, and mutual respect.
Historical Background
Over the centuries, both Qatar and India have shared strong historical relations based on trade, cultural engagement, and maritime connectivity. Decades before oil and gas discoveries propelled Qatar to its current international economic prominence, an industry of pearl trading was holding together the economic linchpin of the region. As part of this trade, buying pearls from Qatari divers; whereafter the pearls would be sent off to the various markets across India and outside, used to be the most prominent of events. It opened the door to a relationship based on mutual economic interest and cultural exchange.
In the 19th and early 20th centuries, Qatar emerged as the maritime trading route linking India with the Middle East, Africa, and Europe. The Indian traders coming to Qatari ports were primarily from the two western coastal states of Gujarat and Maharashtra, who would take textiles, spices, and food grains in exchange for pearls, dates, and other local products. They attracted Indian workers and businesses that boosted the local economy and cultural exchange.
Bilateral Trade Relations
The Qatar-India trade relations have been strong and diverse, going back several decades. The strong economic complementarities underpinning this relationship, as Qatar is a key supplier of energy resources to India and India is a supplier of diverse goods and services to Qatar, also form the basis for India-Qatar relations. Bilateral trade volume between the two countries has been maintaining growth momentum, which reflects the increasingly close economic and trade relations.
As per MEA, and GOI data, India’s bilateral trade with Qatar in 2022-23 stood at US$ 18.77 billion. India’s exports to Qatar were valued at US$ 1.96 billion and imports from Qatar amounted to US$ 16.8 billion during the same period. The major exports from Qatar to India are LNG, LPG, chemicals and petrochemicals, and plastic and aluminum products. On the other side, Qatar’s major exports to India include cereals, copper & iron and steel articles, vegetables, fruits, spices, processed food products, electrical and other machinery, plastic goods, construction materials, textiles and garments, chemicals, precious stones and rubber. India is one of Qatar’s three largest sources of export and one of Qatar’s three largest sources of import.
In FY 2022-23, India’s largest supplier of LNG was Qatar, with 10.74 MMT valued at US$ 8.32 billion, or more than 48% of India’s total LNG imports. Additionally, it is India’s top supplier of Liquefied Petroleum Gas (LPG) of which it exported 5.33 MMT worth US$ 4.04 billion, representing 29% of India’s total LPG import. India also imports ethylene, propylene, ammonia, urea , and polyethylene from Qatar, besides LNG. Consequently, the trade balance is appreciable to Qatar’s advantage. Qatar, however, has seen substantial growth in exports from India over the last few years.
During the visit of Qatar’s Minister of State for Energy Affairs, Engineer Saad bin Sherida Al Kaabi, to India for the India Energy Week 2024, a long-term LNG Sale and Purchase Agreement was signed on February 6, 2024. Under this deal, Qatar Energy will supply 7.5 MMTPA of LNG to Petronet LNG for 20 years starting in 2028.
More than 15,000 Indian companies including small and large joint ventures, are actively engaged in operations in Qatar in various fields like infrastructure, IT, energy, and communications. Coupled with this, Qatar’s ambitious North Field Expansion project is expected to see its LNG production capability soar from an estimated current capacity of 77 MMTPA to 126 MMTPA by 2027, creating a plethora of collaboration opportunities as does ongoing infrastructure development for the 2030 Asian Games. Indian companies have invested around US$ 450 million in Qatar. Qatar’s imports too from India have surged in recent years and were further boosted by the launch of direct shipping routes from Indian ports to Qatar. It has been especially significant in fields like food products, fresh vegetables, medicines, steel products, and construction materials.
Major Exports and Imports
Energy products, especially LNG and crude oil, make up the bulk of India’s imports from Qatar. Qatar is also one of the largest suppliers of LNG to India, meeting approximately 40% of the country’s overall demand for LNG. This energy partnership is crucial for India’s energy security as the country aims to shift to cleaner fuels while meeting its rising energy needs.
India’s exports to Qatar, on the other hand, are more diversified and cover a wide variety of goods and services. Key export items include:
— Food products: Rice, fruits, vegetables, and meat, to feed Qatar’s large expatriate population, especially the Indian diaspora.
– Textiles and garments: Traditional Indian fabrics and ready-made garments are popular in Qatar.
– Machinery and equipment: Industrial machinery, electrical equipment, and automotive parts.
– Chemicals and pharmaceuticals: India is a major supplier of generic medicines and chemical products to Qatar.
– Services: IT services, healthcare, and education are emerging as significant areas of collaboration.
The principal mechanism to promote bilateral interactions and strengthen economic relations is the India-Qatar Joint Commission established in 1999. The signing of MoUs in energy, health, education, technology, etc., and the India-Qatar High-Level Joint Committee has also been critical for addressing trade-related issues and exploring new avenues for cooperation.
Investments and Business Collaboration
Both countries have concluded a set of agreements and bilateral mechanisms to enhance and promote trade and investment. The India-Qatar Trade Agreement signed in the year 1981, in particular, has laid the foundation for bilateral trade relations between the two countries and has since been expanded through various economic and trade cooperation frameworks facilitating commercial exchanges by providing preferential trade terms and reducing trade barriers. Moreover, the implementation of the DTAA and BIPPA has added to the favorable atmosphere for cross-border investments and further strengthened the economic relations between both countries. Since 2019, Qatar Investment Authority (QIA) has made significant investments in India across various sectors.
Qatar has emerged as a significant player in India’s investment trajectory, infusing significant capital in infrastructure, real estate, and energy sectors. The Qatar Investment Authority (established in 2005), one of the world’s largest sovereign wealth funds, has invested in big Indian projects from Mumbai’s Bandra-Worli Sea Link to Bharti Airtel’s telecom ventures.
Future of Qatar-India Economic Cooperation
The trade and economic relations between Qatar and India are poised for significant growth and expansion given the desire and determination of top leadership of both the countries. India’s economic partnership with Qatar is no less significant and comprehensive. With Qatar’s huge natural gas supply to India, the energy cooperation will continue to be the cornerstone of this relationship.
