India seeks closer ties with Saudi to fuel recovery

RIYADH (Reuters) – India said it expects its economy to rebound to 9-percent annual growth rates within two years and wants to expand its energy ties with top OPEC exporter Saudi Arabia to help fuel the recovery.

During a meeting he squeezed in between two rounds of talks on Saturday with Saudi Oil Minister Ali al-Naimi, visiting Prime Minister Manmohan Singh urged Saudi businessmen to invest more in India's energy, agricultural, tourism and telecommunications sectors.

The two countries already have close links with 2 million Indian workers in Saudi Arabia -- the majority of whom work in the services industry -- providing India with the second-biggest source of remittances after the United States.

For its part, Saudi Arabia wants to develop closer ties with Asian countries, such as India, as it seeks to diversify its oil-reliant economy [and expand its oil exports to Asia amid depressed demand from the United States and Europe].

Singh -- the first Indian prime minister to visit Saudi Arabia in almost 30 years -- said Indian companies are well-placed to develop the country's economy.

"We believe that conditions are ripe for moving beyond a traditional (oil) buyer-seller relationship to a comprehensive energy partnership," Singh told the gathering.

Singh also proposed new partnerships between the two countries in the area of renewable energy through sharing of clean technologies and joint ventures.

Indian investment in Saudi Arabia stands at more than $2 billion, covering 500 joint ventures, and India wants Saudi Arabia to also invest in agriculture, construction, manufacturing and pharmaceuticals as well as energy, Singh said.

Singh said bilateral trade reached almost $25 billion in the 2008-09 fiscal year.

CRUDE BOOST

Indias Oil Minister Shri Murli Deora said [in a statement issued on Sunday] Riyadh is willing to increase crude supplies to India to 40 million tonnes from about currently 25.5 million tonnes to meet rising energy demand of the south Asian country.

India will add 1 million barrels per day within two years to its 3.5-million bpd refining capacity which would increase Saudi crude exports by 500,000 barrels per day (bpd) over the same period, said Ashok Sinha, head of Indian refiner Bharat Petroleum Corp (.

"Virtually all Indian oil refineries are designed to process Saudi oil," he told the business gathering.

The Indian government has offered a 10-percent stake in the upcoming Paradip refinery of state-run Indian Oil Corp to Saudi Aramco for about $650 million, an Indian government official said on Thursday.

Singh reiterated India's economy should grow more than 7 percent in the fiscal year 2009/10 and return to a 9 percent annual growth rate in two years.

"We expect to get back to the growth level of about 9 percent per annum within two years," he said.

India's economy grew by 6 percent in the fourth quarter through December from a year earlier, the government said on Friday.

India's economy grew 6.7 percent in 2008/09, slower than 9 percent or more in the previous three years.

Saudi Arabia's spending plans -- totalling $400 billion in the five years to end-2013 -- have attracted an unprecedented wave of visits by foreign dignitaries during a global economic crisis that brought economic activity elsewhere to a halt.

Punj Lloyd's Chairman Atul said Indian contractors want to bid for more Saudi contracts, but he demanded a similar treatment to that of rival Chinese firms, which are allowed to bring their own labour from China.

Fahad al-Sultan, head of the Saudi private sector lobby, said India could make visa procedures more flexible for Saudi businessmen.

"India's geographic dependence on the Gulf is likely to become amplified in the coming years due to limited prospects for enhancing domestic energy production," Riyadh-based lender Banque Saudi Fransi said in a report.