PYQ Relevance:Q) The question of India’s Energy Security constitutes the most important part of India’s economic progress. Analyze India’s energy policy cooperation with West Asian Countries. (UPSC CSE 2017) |
Mentor’s Comment: UPSC mains have always focused on Energy Security (2017), and uneven distribution of mineral oil (2021).
Recently, Prime Minister Narendra Modi met Qatar’s Amir Sheikh Tamim Bin Hamad Al-Thani to strengthen India-Qatar ties into a “strategic partnership” focused on trade, investments, technology, energy, and people-to-people connections. They also discussed key global and regional issues. This is the Amir’s second state visit to India, following his 2015 visit.
Today’s editorial talks about the trade relations between Qatar and India. This content would help in mains answer writing GS Paper 2 in International Relations.
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Let’s learn!
Why in the News?
India and Qatar agreed to strengthen their relationship as a “strategic partnership,” aim to double trade to $28 billion in five years, and attract $10 billion in Qatari investment into India.
What are the trade relations between India and Qatar?
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Why is Qatar important to India?
- Energy Security: As a major LNG supplier, Qatar plays a crucial role in ensuring India’s energy security, accounting for over 48% of India’s LNG imports. Example: India imports around 8.5 million tonnes of LNG annually from Qatar, covering a significant portion of its energy demand.
- Trade & Investment: Bilateral trade is growing, with plans to double it to $28 billion and explore a Free Trade Agreement (FTA). Example: Qatar Investment Authority (QIA) has invested in Indian companies like Reliance Jio and Adani Green Energy.
- Indian Diaspora & Remittances: Over 800,000 Indians work in Qatar, making them the largest expatriate group.Example: Indian workers send billions in remittances to India annually, supporting the economy and families back home.
- Strategic & Security Cooperation: The new Strategic Partnership Agreement enhances cooperation in defence, intelligence sharing, and counterterrorism. Example: India and Qatar conduct joint naval exercises to ensure maritime security in the Gulf region.
- Geopolitical & Diplomatic Influence: Qatar plays a key role in West Asian diplomacy, including mediation in conflicts like Israel-Palestine and Taliban negotiations. Example: India engages with Qatar on regional issues to maintain stability and secure energy interests.
What are the benefits of recent deals between India and Qatar related to LNG?
- Duration and Volume: The new agreement extends the supply of 7.5 million metric tons per annum (MMTPA) of LNG from Qatar to India for an additional 20 years, from 2028 to 2048. This is an extension of the existing contract that was set to expire in 2028.
- Pricing Structure: The renewed deal is expected to offer LNG at rates lower than current prices, potentially saving India around $6 billion over the life of the contract. The pricing structure will differ from previous terms, eliminating fixed charges and allowing for more flexible pricing based on market conditions.
- Energy Security: This agreement is crucial for India’s energy security, as Qatar currently supplies about 35% of India’s LNG imports. The deal ensures a stable and reliable supply of natural gas, which is essential for various sectors, including power generation, fertilizers, and city gas distribution.
What are the challenges between India and Qatar?
- Legal & Human Rights Issues: Several Indian workers face legal challenges in Qatar, including imprisonment and labor rights concerns. Example: Former Indian Navy officer Commander Purnendu Tiwary remains in Qatari custody, despite the repatriation of seven other detained Indian naval personnel in 2024.
- Geopolitical Differences: India and Qatar have differing views on regional issues like Israel-Palestine and Middle East conflicts. Example: India supports a two-state solution, while Qatar has close ties with Hamas, leading to potential diplomatic frictions.
- Economic Dependence on Energy Imports: India heavily relies on Qatar for LNG imports, making it vulnerable to price fluctuations and supply disruptions. Example: Any geopolitical instability in the Gulf or energy price hikes could impact India’s energy security and trade balance.
Way forward:
- Diversifying Economic Engagement: Reduce dependency on energy trade by expanding cooperation in manufacturing, technology, and digital infrastructure. Example: Strengthening investments in sectors like fintech, healthcare, and logistics through bilateral agreements and joint ventures.
- Enhancing Diplomatic and Security Cooperation: Deepen collaboration in counterterrorism, maritime security, and intelligence sharing to address regional security concerns. Example: Conduct more frequent joint naval exercises and establish structured dialogues on geopolitical issues like the Israel-Palestine conflict.
- Addressing Legal and Labor Concerns: Strengthen diplomatic mechanisms to protect Indian workers’ rights and ensure fair treatment of those facing legal challenges in Qatar. Example: Expand labor agreements, improve grievance redressal mechanisms, and negotiate for faster repatriation of detainees, including Commander Purnendu Tiwary.
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