The Qatar-Gulf Arab nations conflict is not good news for India

Indians are the largest expatriate community in Qatar, the same way they are in Saudi and UAE the two key countries who are in the opposite camp.

Four Arab nations cut diplomatic ties to Qatar on Monday, further deepening a rift among Gulf Arab nations over that country’s support for Islamist groups and its relations with Iran.(Reuters)

India would hope that the differences between Qatar and Gulf countries, which are home to 8 million Indians and vital to India’s energy supply, are sorted out amicably and as soon as possible.

Bahrain, Egypt, Saudi Arabia, and the United Arab Emirates cut diplomatic ties with Qatar on Monday, accusing the wealthy Gulf Arab state of supporting Islamist groups and its relations with Iran.

The coordinated move dramatically escalates a simmering dispute over Qatar’s support of the Muslim Brotherhood, the world’s oldest Islamist movement, and adds accusations that Doha even backs the agenda of regional arch-rival Iran.

The three Gulf states announced the closure of transport ties with Qatar and gave Qatari visitors and residents two weeks to leave their countries.

Indians are the largest expatriate community in Qatar, the same way they are in Saudi Arabia and the UAE—the two key countries who are in the opposite camp. And, the immediate worry is the trouble Indians would face as measures to isolate Qatar would hit them there in terms of their travel.

“The best case scenario for India is the issue being sorted soon, considering a large number of Indians work there,” strategic affairs expert MK Bhadrakumar said.

India also has robust defence and energy ties with Qatar. India is the third largest export destination for Qatar (behind Japan and South Korea) and ranks at 10th position for Qatar’s imports.

The Gulf Arab state is the largest supplier of LNG to India, accounting for over 65% of India’s global import and 15% of Qatar’s export of LNG with an annual import of 7.5 million metric tons (MMT) of liquefied natural gas (LNG) under a long-term contract between Petronet LNG of India and RasGas Co Ltd of Qatar, and some spot purchases by Indian companies from time to time.

On December 31, 2015, Petronet, India’s largest natural gas importer, and RasGas signed an agreement for an additional supply of 1.0 mn tonnes of LNG annually from the Qatari company through the remainder of the 25-year contract, ending in 2028.

India also imports ethylene, propylene, ammonia, urea and polyethene from Qatar. Therefore, the balance of trade continues to be heavily in Qatar’s favour.

However, in the last two years, there has been a substantial growth of India’s exports, amounting to nearly $1 billion out of the two-way trade of nearly $17 billion in 2013-14, registering an export growth of 45% over the export figure ($687 million) in 2012-13.

In 2014-15, India’s exports exceeded $1 billion ($1056 million), though bilateral trade came down to $15.7 billion due to decline in Qatar’s exports to India from $15.7 billion in 2013-14 to $14.6 billion in 2014-15.

Major items of Indian exports are machinery and equipment, transport equipment, articles of iron or steel, plastic and articles thereof, construction material, electrical and electronic items, textiles and garments, chemicals, precious stones, rubber, spices and cereals.

A number of reputed Indian companies, particularly in construction and infrastructure and IT, including Larsen & Toubro Limited, Punj Lloyd, Shapoorji Pallonji Group; Voltas Ltd, Simplex Infrastructures Ltd, Tata Consultancy Services Ltd, Wipro; MahindraTech, HCL Technologies Ltd, etc, have operations in Qatar.

State Bank of India, ICICI, and other Indian banks also have limited operations under Qatar Financial Centre or private exchange houses in Qatar.
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