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A new dawn for logistics as the GCC and India draw closer

For both parties to benefit, investment in transport infrastructure is needed

Indian prime minister Narendra Modi andUAE President Sheikh Mohamed bin Zayed at the recent Brics summit Grigory Sysoev/Alamy Live News via Reuters
Indian prime minister Narendra Modi and UAE president Sheikh Mohamed bin Zayed at the recent BRICS summit

Closer economic, diplomatic and social ties between the GCC and India are likely to generate significant opportunities for the shipping, aviation, rail and logistics industries, as well as new investment in infrastructure projects. 

The growth of a new integrated trading area will have implications not only for the region but also globally, due to the shifting dynamics of international politics.

The deepening relationship will have benefits for both parties. India views the vast oil and gas resources in the GCC – which it refers to as part of its ‘extended neighbourhood’ – as hugely strategic for its own energy security. 

In return, the GCC has been an active investor in India. The Saudi government has committed to fast tracking a $100 billion investment in the country covering initiatives from defence to energy, including a giant new refinery

Beyond this, there are common interests in maintaining stability in the region, not least as the GCC is home to almost nine million expatriate Indians.

For the aspirations of GCC and Indian politicians to be met, there will need to be considerable investment in transport infrastructure. Part of the plan involves the development of the India-Middle East-Europe Economic Corridor (IMEC) – a road, rail, shipping, energy and ICT network linking the GCC to India and Europe. 

From the GCC perspective it will help to develop the region as a strategic logistics and supply chain hub as the balance of power shifts from the West towards the “Global South”. 

From India’s standpoint, connection with inter-regional hubs in the GCC will help to integrate it within global logistics networks, allowing access to important new markets while reducing the costs of moving its goods. 

India’s own maritime supply chain infrastructure will need to be upgraded to facilitate these flows, but in this respect GCC countries will provide a ready source of capital.

India and the GCC have a shared vision of a multi-polar world

Moreover, the joint commitment to infrastructure investment can also be seen as a balance to the Belt & Road Initiative funded by China, India’s great strategic rival, which has been so successful economically and politically. 

For this reason, deepening ties between the GCC and India will be welcomed by the US and Europe, intent as they are on lessening their economic dependence on China and weakening China’s grip on the developing world. 

However, these are not goals shared by their GCC partners, which see themselves rather as a bridge between the East and West and unwilling to “pick sides”. For example, while Saudi Arabia and the UAE remain in the Western strategic camp, they have also recently joined the BRICS group of emerging markets.

So, what will the implications of enhanced regional interconnectivity mean for the supply chain and logistics industry?

Increased flows of Indian manufactured goods to the GCC will largely benefit the maritime sector, transiting ports on the west coast of India, such as Jawaharlal Nehru, en route to the major GCC ports which will act as regional distribution hubs. This set up will benefit Abu Dhabi’s Khalifa Port in particular.

This increased interconnectivity will provide a boost for GCC warehousing property and logistics companies, such as Bharat Mart, a recently announced 100,000 sq m facility in the Jebel Ali Free Zone which has been developed to export ‘Made in India’ goods to the rest of the world. This followed a comprehensive economic partnership agreement (Cepa) signed by the UAE and India.

Future plans will see the completion of an onward rail network linking the GCC with the Mediterranean and Europe through Israel, although present geopolitical tensions have called this part of the strategy into question.

However, sea-air products, using GCC airports, have experienced a major increase in popularity since the Red Sea disruption, significantly reducing the time taken to get products from Asia to Europe.

India and the GCC have a shared vision of a multi-polar world that will facilitate greater levels of economic integration across the region.

At the same time, India’s own plans to become a major global manufacturing hub in opposition to China will prove popular in the EU and USA and form part of their own de-risking strategies.

This can only benefit the GCC’s highly developed transport and logistics sector which will become a major conduit for Indian products.

John Manners-Bell is CEO of Transport Intelligence Insight and founder of Foundation for Future Supply Chain