TRADE AND INVESTMENT: BETWEEN KUWAIT AND INDIA
 Based on the information provided by the Embassy of India, Kuwait
India-Kuwait Bilateral Trade and Economic Cooperation
Kuwait is a small, relatively open, petroleum based economy with heavy dependence on foreign manpower. It has always offered an open, highly competitive and affluent market for capital and consumer goods and for project exports. India-Kuwait relations have always had a pro trade-bias, and bilateral trade has, risen steadily since 1991.

India-Kuwait trade was US$ 9.03 billion in 2009-2010, of which non-oil trade accounted for approximately US$ 1.1 billion while petroleum exports from Kuwait to India were approximately US$ 7.9 billion. India has consistently been among the top ten trading partners of Kuwait. As per Indian Government sources, the trade during 2006-2010 was as follows:
India-Kuwait Bilateral Trade FY 2006-10
in US$ million
  2006-07 2007-08 2008-09 2009-10
Indian Exports to Kuwait   614.81    681.54 797.50 782.45
Indian Imports from Kuwait   5,993.23   7,704.25 9593.74 8,249.49
Total  6,608.04   8,385.79 10,391.24 9,031.94
Source : Department of Commerce, Ministry of Commerce & Industry, Government of India
In Rs. Lakhs

 

 2006-07 2007-08 2008-09 2009-2010
Indian Exports to Kuwait 2,77,989.70 2,74,490.59 3,62,840.57 3,71,035.94
Indian Imports from Kuwait 27,11,417.49 30,95,993.03 43,19,944.55 38,98,799.19
Total 29,89,407.19 33,70,483.61 46,82,785.12 42,69,835.12
Source: Department of Commerce, Ministry of Commerce & Industry, Government of India
Note : POL imports accounted for US$ 5,646.65 million (Rs. 25,57,078 lakhs) in the year 2006-07, US$ 7,278.97 million (Rs. 29,29,129 lakhs) in the year 2007-08 and US$ 9,193.78 million (Rs. 41,40,219.26 lakhs) in the year 2008-09 and US$ 7,909.80 million (Rs 37,39,130.13 lakhs) in the year 2009-10.
Total bilateral trade between India and Kuwait in US$ terms increased by 7.7% from US$ 8385.79 million in the year 2007-08 to US$ 9,031.94 million in 2009-10. In Rupee terms, it grew by 26.68% from Rs. 33,70,483.61 lakhs in 2007-08 to Rs 42,69,835.12 lakhs in 2009-10. The difference in the growth rates in rupee and dollar terms is due to the variation in the exchange rate in corresponding years.
India’s Exports to Kuwait
The exports from India to Kuwait increased by 14.80% in US$ terms from US$ 681.54 million in 2007-08 to US$ 782.45million in 2009-10. In Rupee terms, it increased by 35.17% from Rs 2,74,490.59 lakhs to Rs 3,71,035.94 lakhs in the corresponding period.

A pie-chart showing the share of top 10 items of exports from India during 2008-09 shows that the major items exported from India were Cereals, Meat and Edible Meat Offal, Articles of Iron or Steel, Electrical Machinery and Equipment and Parts thereof; Articles of Apparel and Clothing Accessories, Nuclear Reactors, Boilers, Machinery and Mechanical Appliances, Residues and Waste from the Food Industries, Iron and Steel, Edible Fruit and Nuts, Fish and Crustaceans, Molluscs and other Aquatic Invertebrates.
Source: Department of Commerce, Ministry of Commerce & Industry, Government of India

India’s Imports from Kuwait

India’s imports from Kuwait went up by 7.07% in US$ terms from US$ 7704.25 million in 2007-08 to US$ 8,249.49 million in 2009-10. In Rupee terms, the imports rose by 25.93% from Rs. 30,95,993.03 lakhs to Rs 38,98,799.19 lakhs in the corresponding period. India’s imports from Kuwait (excluding POL) were US$ 339.69 million in 2009-10.

A pie-chart showing the share of top 10 items of imports (excluding Petroleum & its products) from Kuwait during 2009-10 is given below. The major items imported by India were Organic Chemicals, Plastic and Articles thereof, Iron and Steel, Fertilisers, Aluminium and Articles thereof, Salt; Sulphur; Earths and Stone, Inorganic Chemicals; Organic or Inorganic Compounds of Precious Metals, Copper and Articles thereof, Nuclear Reactors, Boilers, Machinery and Mechanical Appliances, Miscellaneous goods.
Source: Department of Commerce, M/o Commerce & Industry, Government of India
Kuwait is the largest supplier of crude oil to India from the Gulf region after Saudi Arabia. India imported Rs. 37,39,130.13 lakhs (US$ 7.9 billion) worth of POL from Kuwait in the year 2009-10.
Non-Oil Bilateral Trade
Total non-oil bilateral trade between India and Kuwait grew by 2.77 % from US$ 1,089.72 million in 2007-08 to US$ 1,119.92 million in 2009-10. In Rupee terms, it rose from Rs. 4,38,727.88 lakhs to Rs. 5,29,656.48 lakhs.

India-Kuwait Non-Oil Trade FYs 2007-10
in US$ million

 

 2007-08 2008-09 2009-2010
Indian Exports to Kuwait 674.98 755.88 780.23
Indian Imports from Kuwait  414.74 399.96 339.69
Total 1,089.72 1,155.76 1119.92
Source: Department of Commerce, Ministry of Commerce & Industry, Government of India

 

In Rs. Lakhs

 

 2007-08 2008-09 2009-2010
Indian Exports to Kuwait 2,71,864.46 3,43,414.60 3,69,987.42
Indian Imports from Kuwait 1,66,863.42 1,79,725.29 1,59,669.06
Total 4,38,727.88 5,23,139.89 5,29,656.48
Source: Department of Commerce, Ministry of Commerce & Industry, Government of India
Bilateral Agreements between India and Kuwait in Economic Field
  1. Agreement on the Avoidance of Double Taxation and Prevention of Fiscal Evasion of Taxes on Income entered into force from October 17, 2007 on incomes in India and Kuwait and has come into effect for incomes derived after April 1, 2008.
  2. Memorandum of Understanding (MoU) on Labour, Employment and Manpower Development signed on April 10, 2007 has been ratified by both sides.
  3. Agreement on Drug Demand Reduction and Prevention of Illicit Trafficking in Narcotic Drugs, Psychotropic Substances and Precursor Chemicals and Related Matters signed on June 15, 2006 is awaiting ratification.
  4. Agreement on Juridical and Judicial Cooperation in Civil and Commercial Matters signed on August 16, 2005 is awaiting ratification;
  5. Agreement for Encouragement and Reciprocal Protection of Investment signed on November 27, 2001 and ratified on June 28, 2003.
  6. Memorandum of Understanding (MoU) on Civil Aviation authorities, latest one signed in June 2007.
  7. Agreement on Scientific and Technological cooperation signed in April 2009.
  8. MoU between the Public Authority for Industry (PAI) of Kuwait and Indian Importers Association (IIA) based in New Delhi in May 2006 wherein IIA will promote the export, re-export and sales of Kuwaiti manufactured non-oil industrial products in its appointed territory for the Kuwaiti manufacturers introduced to it by PAI.
  9. The Kuwait Chamber of Commerce & Industry (KCCI) signed an MoU with the Associated Chambers of Commerce & Industry (ASSOCHAM) during the State Visit to India from June 14-19, 2006 by HH Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, the Amir of the State of Kuwait. The MoU foresees promotion of trade, investment, scientific and technical cooperation between the India and Kuwait.
Indian Companies in Kuwait
Telecommunications Consultants India Limited (TCIL), Life Insurance Corporation of India (International) , Life Insurance Corporation of India (LIC) Housing Finance, New India Assurance Company, Oriental Insurance Company and National Aviation Company India Ltd. (NACIL) have their offices in Kuwait, in association with local Kuwaiti sponsors, as per the prevailing regulations. Besides, there are private Indian companies like L&T, Bridge & Roof, Punj Lloyd, and Kalpataru who have secured large projects, particularly in the oil sector, and thus have sizeable establishments in Kuwait.
Kuwaiti Investment in India
According to the figures released by the Department of Industrial Promotion & Policy’s Secretariat for Industrial Assistance (SIA), Kuwaiti investment in India has been modest.

Much of the Kuwaiti investments, however, have gone into India through portfolio management. Kuwaiti FDI has also gone into India through international investment companies or through countries providing tax breaks. This scenario could change with the implementation of the Double Taxation Avoidance Agreement between the two countries which came into effect on April 1, 2008.

Following the visit to India by His Highness the Amir of the State of Kuwait, considerable interest has been generated among Kuwaiti investors in the Indian market. The Kuwait Investment Authority (KIA) has shown interest in sectors dealing with infrastructure, power, financial services, real estate, and information technology. The Kuwait Petroleum Company (KPC) through its international arm, the Kuwait Petroleum International (KPI), has expressed interest in investment in the petrochemicals sector.
India Funds
The Kuwait Investment Authority has made regular portfolio investments in the stock market in India and through leading international financial managers. Authentic and complete information regarding investments made in Indian equities by Foreign Institutional Investors (FIIs) from Kuwait is not available. However, India-related funds launched in Kuwait include: India Fund [launched by Al-Madina for Finance and Investments (AMFIC), a Kuwait-based Kuwaiti Shareholding Company in October 2005]; Tijari India Fund: [launched by The Commercial Bank of Kuwait on December 9, 2006]; India Equity Fund [launched by The Kuwait and Middle East Financial Investment Company on January 14, 2007]; Kuwait India Holding Company (KIHC) [launched by Noor Financial Investment Company ]; Indian Private Equity Fund [promoted by Khaleej Finance and Investment from Bahrain, Kuwait Investment Company and Kuwait Finance House]; India Private Equity Fund [launched by National Bank of Kuwait (NBK); 3rd Real Estate Islamic Fund [launched by NBK in May 2007]; and Mayur Hedge Fund [launched by Global Investment House, Kuwait, in August 2008].

By August 2010, KIHC has been able to raise US$ 120 million to set-up private property fund for investments in the infrastructure projects in India. In September 2010, AMFIC announced that its India Fund has realized a remarkable profit of 55.77% since its inception. AMFIC stated that in 2010 alone, the growth touched 9.2%, as a result of good performance of India’s share market.

In July 2009, UTI Asset Management Company set up a private equity fund worth $500 million with Kuwait's Noor Financial Investment Company and HSH Nordbank of Germany, to invest in India in unlisted infrastructure companies engaged in sectors such as roads, ports, power, logistics, airports and energy among others.
Civil Aviation
Following talks between civil aviation delegations of India and Kuwait held in Kuwait on June 28 – 30, 2007, an MoU was signed with both sides reaffirming their commitment to the Air Services Agreement governing the civil aviation sector. Both sides also agreed to increase capacity entitlements of each side from 8,320 to 12,000 seats per week. The designated carriers of Kuwait were granted access to 3 additional points of call in India viz. Hyderabad and Kolkata with immediate effect and Bangalore with effect from the winter of 2008. Both sides reached a common understanding that in future traffic rights and capacity entitlements would be used to serve only the direct India-Kuwait market and not indirect markets to/from third countries.

Air India, Jet Airways and Kuwait Airways currently operate direct flights to various important destinations in India. National Aviation Services (NAS), a Kuwait based company, has been awarded handling contracts at 15 airports in India.