Here’s why India is wooing the Middle East

Here’s why India is wooing the Middle East · CNBC

Indian Prime Minister Narendra Modi has traveled far and wide in his two years in office in a bid to raise India's global profile and make it an attractive option for international investors.

It was, then, inevitable he would turn his attention to the Middle East - a region rife with conflict but rich in cash and natural resources.

As Prime Minister, Modi's first visit to the region was in 2015, when he visited the United Arab Emirates (UAE). Subsequently in April 2016, Modi met Saudi Arabia's King Salman in Riyadh. Modi has also met several leaders in the region at the sidelines of global conferences.

On Sunday, May 22, the Indian Prime Minister will embark on a two-day visit to long-time partner Iran, while local media reports suggested a visit to Qatar was also on the cards in the next few months.

Most experts point to oil as a key reason for India's continued engagement with the region. "The Middle East is of vital importance for India's energy security, providing around 60 percent of India's oil imports and liquefied natural gas (LNG) imports," Rajiv Biswas, chief economist for Asia Pacific at IHS told CNBC.

Countries in the Middle East accounted for 50 percent of India's top 10 import sources of crude oil between April 2015 and January 2016, according to data from India's ministry of commerce.

Nearly 20 percent of India's total import of crude oil in this period came from Saudi Arabia, closely followed by Iraq. Iran was the sixth highest supplier for the period.

Biswas added that Iran's large reserves of natural gas will also make it an important source for India's LNG imports in the future. Currently, Qatar, Nigeria and Australia are the largest LNG suppliers to India, according to government data.

India also sees the Middle East, already a key trading partner, as an important source of investment in infrastructure development, manufacturing and services sectors.

"A big focus of this government is to attract long-term infrastructure financing that India cannot provide on its own, given the non-performing asset problems affecting local banks ," according to Sasha Riser-Kositsky, an analyst with Eurasia Group.

Following the visit to Riyadh in April, Modi encouraged the state-owned oil giant Saudi Aramco, SABIC and other Saudi companies to investment in India's infrastructure sector, and participate in projects creating mega industrial manufacturing corridors and smart cities.

But it's a two-way street, with Middle Eastern countries also "shopping around for economic and security opportunities and partners," Sumitha Narayanan Kutty, an associate research fellow with the S. Rajaratnam School of International Studies at the Nanyang Technological University, told CNBC.