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Contents

Introduction ............................................................................................................................................ 2

OPEC Economies: An overview ............................................................................................................... 3

Indias trade with OPEC countries.......................................................................................................... 4

Saudi Arabia ........................................................................................................................................ 4

Iran ...................................................................................................................................................... 5

UAE ...................................................................................................................................................... 6

Iraq ...................................................................................................................................................... 8

Kuwait ................................................................................................................................................. 9

Indonesia ........................................................................................................................................... 10

Conclusion ............................................................................................................................................. 11

References14

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Introduction

International trade is the exchange of goods and services between countries. It leads to an

economy where demand and supply both are affected by global events. The world is

becoming a global village. Countries need to trade with each other in order to gather

resources that they lack. International trade is necessary for a variety of reasons the

majority being exchange of ideas. An example of this can be Japan who is considered the

world leader in consumer electronics. Other countries can take advantage of this technical

know how by trading with Japan. Another reason contributing for international trade is

gathering resources. The resources need not be only in the form of material goods but can

be labour related as well. Many companies outsource their services to countries where

labour is available at a cheaper rate. This not only helps the companies to reduce their cost

and increase profitability but also provides employment outside boundaries. Another

benefit of international trading is that it increases dependence among countries and lessens

the risks of an economic collapse. In case of an economy being stand alone it faces a greater

chance of collapse in the situation of a calamity.

There are also secondary benefits of international trading. It leads to

better utilization of resources that a country possesses. The consumers are exposed to avariety of choices in every sector and this subsequently leads to keeping prices of goods in

check by maintaining a balance between demand and supply. The availability of goods in

global market ensures that manufacturers strive to keep their products at a reasonable

standard and improve the quality of goods. This interdependence also brings countries

closer and reduces the chance of wars or conflicts.

International Trade increases the opportunity of Foreign direct Investment

(FDI).It is the amount that individuals invest outside a country. Foreign Direct Investment

makes a way for foreign currency as well as expertise to enter a country thereby leading to

rise in employment levels. The increase in foreign currency also has a implication ofincreasing the GDP of any country.

Although international trade is aimed to increase the profitability it needs to be

strictly regulated and controlled or it can lead to labour exploitation in the form of less

wages or extra hours of work. Some economists are also of the view that global trading

benefits those organisations that possess economies of scale. For companies with less

working capital, trading globally runs the chances of over running the organisation. Foreign

trade may lead to hampering of domestic companies. Many developed countries follow a

dumping policy that can lead to restricted growth of underdeveloped nations. It can also

lead to import of harmful products and hampering of a nations culture. Products are arepresentation of ideas of the manufacturing country. An international market increases

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Indias trade with OPEC countries

Saudi Arabia

India and Saudi Arabia enjoy friendly and cordial relationship reflecting the centuries old

cultural, social and economic ties. The establishment of diplomatic relationships was started

in 1947 with high level visits from both sides. King Saud visited India in 1955 which was

followed by visit from Jawaharlal Nehru in 1956. Indira Gandhi made a visit to Saudi Arabia

which further boosted the bilateral ties between the two countries. In recent times, visitfrom king Riyadh in 2006 led to signing of Delhi declaration which opened new gates for

trade between the two countries. The declaration provides basis for all kinds of mutual

beneficial trade relations. Reciprocating this, Manmohan Singh visited Saudi Arabia in 2010

which led to signing of Riyadh declaration and raised the level of bilateral relationships.

India-Saudi Trade (in million USD)

Indias trade with Saudi Arabia have shown a remarkable growth in last few years and the

trade between two countries have increased three fold. Saudi Arabia is the 4th largest trade

partner of India Total trade between the two countries was 43.19 billion USD in 2012-2013.

A major portion of trade was crude oil with one fifth of countries total needs fulfilled by

Venezuela, 24.8

Saudi Arabia, 22.1

Iran, 13.1

Iraq, 11.7

Kuwait, 8.5

United Arab

Emirates, 8.1

Libya, 4

Nigeria, 3.1

Qatar, 2.1 Algeria , 1

Angola , 0.8Ecuador, 0.7

OPEC Oil Reserves

Venezuela

Saudi Arabia

Iran

Iraq

Kuwait

United Arab Emirates

Libya

Nigeria

Qatar

Algeria

Angola

Ecuador

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Saudi Arabia. For India, Saudi Arabia is the 14th largest market for its exports while Saudi

Arabia is the source of 6.35 % of total imports for India.

Year2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

2012-2013*

Imports fromSaudi Arabia 19,470.30 19,972.74 17,097.57 20,385.28 31,060.10 33,410.96

Exports toSaudi Arabia 3,711.16 5,110.38 3,907.00 4,684.40 5,683.29 9,779.97

Total trade 23,181.46 25,083.12 21,004.57 25,069.68 36,743.40 43,190.93

% increase in

bilateral trade - 8.2 -16.26 19.35 46.57 17.54

% increase inIndian

imports - 2.58 -14.4 19.23 52.37 7.56

% increase inIndian

exports - 37.7 -23.55 19.9 21.32 72.08

(in million USD)

Iran

IndiaIran relations have spanned several centuries marked by significant interactions. The

two countries shared a common border till 1947 and have shared common features in

language, culture and religion. . India and Iran hold talks on economic and trade issues in

joint commissioner meetings. Several MOUs/agreements that were signed during joint

commissioner meetings are air service agreement, MOU on cooperation for new and

renewable energy, MOU on cooperation in science and technology etc.

India-Iran Trade

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.0030,000.00

35,000.00

40,000.00

45,000.00

50,000.00

Imports from Saudi Arabia

Exports to Saudi Arabia

Total trade

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India-Iran trade relations traditionally started with Indias import of Iranian crude oil. Indias

total trade with Iran stood at 10.48 billion USD (1.8 billion USD in exports and 8.59 billion

USD in imports). Indias exports to Iran include rice, machinery and equipments, primary

and semi finished processed minerals, manmade yarn & fabrics, tea, organic/inorganic/agro

chemicals, rice, metals, drugs/pharmaceuticals & fine chemicals, rubber manufactured

products etc.

Year

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Indias

exports to

Iran

1446.48 1943.92 2534.01 1853.17 2492.9 1903.29

Indias

imports

from Iran

7618.55 10943.61 12376.77 11540.85 10928.21 8592.66

Total Trade9065.03 12887.52 14910.78 13394.01 13421.12 10495.95

Trade

Balance

-

59,321.19

-88521.8 118401 109621.5 118632.9

Total trade

growth rate

(%)

- 42.17 15.7 -10.17 0.2 -

(in million USD)

UAE

India and UAE share a strong bond of friendship based on millennium old cultural, social and

economic interactions between the two countries. It started with the barter system when

0

2000

4000

6000

8000

10000

12000

14000

16000

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Indias exports to Iran

Indias imports from Iran

Total Trade

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countries exchanged goods for goods. Bilateral ties have received great impetus with high

level visits from both countries. India and UAE have time to time, signed several MOUs

which provide an institutional framework for cooperation in different sectors like civil

aviation agreement(1975), cultural cooperation agreement(1985), double taxation

avoidance agreement(1992) etc.

India-UAE Trade

Economic and commercial relations have been a key aspect in the bilateral relations

between India and UAE. India has emerged as a major investor in UAE and India is the major

destination for exports for UAE. India UAE trade has been growing at a very fast pace. It

has grown from 180 million USD in 1980s to 75 billion USD in 2012-2013. Indias exports to

UAE includes precious metals, stones, gems and jewellery, food items (cereals, milk, sugar,

vegetables, sea food etc.), textiles etc and Indias major imports from UAE includes

petroleum and petroleum products, minerals, chemicals, wood and wood products.

Year

2007-

2008

2008-

2009

2009-

2010

2010-

2011

2011-

2012

2012-

2013

EXPORT 15,636.91 24,477.48 23,970.40 33,822.39 35,925.52 36,265.15

IMPORT 13,482.61 23,791.25 19,499.10 32,753.16 35,790.39 38,436.47

TOTAL

TRADE 29,119.52 48,268.72 43,469.50 67,575.55 71,715.91 74,701.62

%Growth

(Total ) 40.83 65.76 -9.94 53.15 7.72 4.16

%Growth

(Exports) 30.07 56.54 -2.07 41.1 6.22 0.95

%Growth

(Imports) 55.77 76.46 -18.04 67.97 9.27 7.39

(in million USD)

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Iraq

Iraq was one of the few countries with which India develop diplomatic relationship at the

embassy level just after independence. Both the nations signed the treaty of perpetual

peace and friendship in 1952 and agreement for cooperation in 1954. India was the first to

recognize the Baath party and Iraq remained neutral in indo-Pakistan war of 1965. Indiasrelations with Iraq suffered due to US sanctions on Iraq but India found a way with Oil-for-

food programme which permitted India to exchange oil for essential goods.

India-Iraq Trade

India and Iraq have agreed to turn the energy trading relationship into strategic partnership,

through joint ventures in petrochemical plants, oil exploration and fertlilizer plants. Iraq is

one of the major exporter of crude oil to India, supplying more than2,20,000 barrels of oil

per day to Indian Oil Corporation. The trade between the two countries stood at 21 billion

USD in year 2012-13 with 20 billion USD approx in imports and 1.2 billion USD in exports.

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12

2012-

13

Indian

Exports to

Iraq 271.1 430.8 477.1 674.9 773.9 1241.6

Indian

Imports

from Iraq 6829.2 7454.4 7013.1 8993.6 18916.1 20090.0

TotalTrade 7100.3 7885.2 7490.2 9668.5 19690.0 21331.5

0.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

80,000.00

2012-2013

EXPORT

IMPORT

TOTAL TRADE

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(in million USD)

Kuwait

India and Kuwait enjoy traditionally friendly relationship. The relations are based on history

and have stood the test of time. Geographic proximities, historic links, cultural similarities

and presence of large number of expatriates in both countries have played a major role in

long standing relationship between the two countries. India and Kuwait had been the

natural trading partners. High level visits from India to Kuwait which includes visit from Dr

Zakir Husain in 1965, Indira Gandhi in 1981 and Dr Hamid Ansari in 2010 have played a

major role in building strong ties between the countries. Along with that both the countries

have signed many agreements that provide framework for development of trade relations.

India-Kuwait Trade

India-Kuwait trade always had an important dimension. The overall trend of Indias tradewith Kuwait has been positive. The total trade between the two countries was 17556 million

USD in 2012 (1181 million USD in exports and 16375 million USD in imports) of which non

oil trade accounted for 1.9 billion USD and oil exports from Kuwait to India accounts for 15.6

billion USD. India has consistently ranked among the top ten trading partners with Kuwait.

2007-

08

2008-

09

2009-

10

2010-

11

2011-

12

Indian

Exportsto Kuwait 681.54 797.5 782.45 1856.01* 1,181.41

0.0

5000.0

10000.0

15000.0

20000.0

25000.0

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Exports

Imports

Total Trade

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Indian

Importsfrom

Kuwait 7,704.25 9593.74 8,249.49 10,313.64 16,375.37

Total 8,385.79 10,391.24 9,031.94 12,169.65 17,556.78

(in million USD)

Indonesia

India and Indonesia have shared two centuries long religious and cultural contacts. During

our struggle for independence, president sukarmo and pandit Jawaharlal Nehru worked

together for the cause of independence for both countries and laid the foundation for afro-

Asian relations and non alignment movement. Since the adoption of look east policy by

India, there has been a great progress in bilateral relations between both countries in

security, political, commercial, defence and cultural fields.

India-Indonesia Trade

India and Indonesia share a strong trade relation and trade has been a key aspect in the

growing relations between the two countries. The total trade between the two countries

has been growing at a great pace and the total trade in the tear 2012-13 has been 19.85

billion USD. Indias exports to Iraq includes precious metals, food items (cereals, milk, sugar,

vegetables, sea food etc.), textiles etc and Indias major imports from Iraq includes

petroleum and petroleum products, minerals, chemicals, wood and wood products.

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

Indian Exports to

Kuwait

Indian Imports fromKuwait

Total

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2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Indian Exports

to

Indonesia 2159.1 2517.3 3078.3 5689.9 6698.4 5332.8

Indian Imports

fromIndonesia 4823.7 6686.0 8643.8 9906.4 14556.5 14518.0

Total Trade 6982.8 9203.3 11722.1 15596.4 21254.9 19850.8

(in million USD)

Conclusion

OPEC was found to safeguard national interests and to maintain stability in the oil market. In

the beginning it was difficult for OPEC to coordinate with other international organizations

as the environment was not very receptive when OPEC was born. But now dialogues are

being established to bridge the gap between producers and consumers. As energy is the

central issue for any nation be it developing or developed such talks become all the more

important. The shale revolution is posing a threat to the OPEC countries in recent times. But

in spite of this the OPEC countries have agreed to keep their output unchanged at 30 million

barrels a day. It is expected that they will continue to fulfil nearly one third of the worlds

total oil demand.

OPEC now no longer holds the power that it once had. A big player like Saudi

Arabia cannot change the prices of oil by increasing or decreasing production. Since

production outside OPEC has considerably risen United States is no longer that dependent

on OPEC. Also if the ban on Iran is lifted given that Iran takes back its nuclear programme

0.0

5000.0

10000.0

15000.0

20000.0

25000.0

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Exports

Imports

Total Trade

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that could lead to a boost in oil production Expansion plans in Iraq and Iran could lead to

much reduced prices than the cartel desires

The ties among OPEC countries and India is seen to be strengthened in future as the oil

producing countries are looking to increase their investment in oil production facilities on

account of developing economies like India and China. They recognize them as the biggestbuyers of future times. India is indeed Nigerias biggest importer.The prices will now be

determined not only by Asian growth but by global supplies in non OPEC countries as well.

Moderated oil prices will lead to better growth in Asian region which will lead to increased

demand for oil.

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References

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http://www.opec.org/opec_web/en/about_us/25.htm

http://www.thehindubusinessline.com/industry-and-economy/india-iraq-to-turn-

energy-trade-into-strategic-tieup/article5052976.ece

"OPEC Statute"(PDF). Organization of the Petroleum Exporting Countries. 2008.

p. 8. Retrieved 8 June 2011. "English shall be the official language of the

Organization."

"Our Mission".OPEC. Retrieved 16 February 2013.

"Brief History".OPEC. Retrieved 16 February 2013.

http://www.newsmax.com/Newsfront/opec-cartel-illegal/2009/12/12/id/341497

"CHE | Responding to Crisis".Envhist.wisc.edu. April 26, 2010. Retrieved 2012-08-07.

"OPEC Oil Embargo 19731974".U.S. Department of State, Office of the Historian.

Retrieved August 30, 2012.

Citino 2002,p. 4: "Together with Arab and non-Arab producers, Saudi Arabia formed

the Organization of Petroleum Export Countries (OPEC) to secure the best price

available from the major oil corporations."

indembassyuae.org/political.html www.indianembassy.org.saContent.aspxID867

http://www.indianembassy-tehran.ir/india-iran_relations.php

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