The Gulf is one of the more important regions for India for a number of reasons. As part of India's extended neighbourhood, it supplies a major part of India's oil and gas requirements, and as the home of the largest Indian community of expatriate workers, it has close links with the Indian economy. Saudi Arabia is India's largest supplier of crude oil and petro-products.

Within a month of the UPA Government assuming office, Minister of State for External Affairs E Ahamed visited Saudi Arabia. Though the visit was essentially to sign the annual Haj Agreement with the Saudi Government, it was also an occasion to establish contact with the country's leadership. Mr Ahamed carried a letter from Prime Minister Manmohan Singh for King Fahd ibn Abdel Aziz, and in a rare gesture he was given an audience with the Saudi King within a couple of hours of his arrival in Jeddah. In his letter, the Prime Minister expressed his Government's interest in furthering Indo-Saudi bilateral relations. Dr Manmohan Singh had visited Riyadh when he was the Finance Minister.

Mr Ahamed signed the Haj Agreement with the Saudi Minister of Haj, Iyad bin Amin Madani, under which 117,000 Indians would perform the Haj pilgrimage this year.

Mr Ahamed's visit took place shortly after the terrorist attack at Khobar where eight Indians were killed. The Saudi side had assured the Manmohan Singh Government that Indians had not been targeted during the Khobar hostage crisis even though they sustained the most casualties among the 22 persons killed in the attack. Indians were "victims of circumstance", it was said, since they form the largest expatriate group in Saudi Arabia and are involved in various segments of Saudi life.

Saudi Arabia has been the target of a series of terrorist and suicide attacks in the past one year. The terrorist attacks are aimed at destabilising the Saudi economy and have increasingly targeted the Western expatriate population that provides a major part of the workforce in the Kingdom. The Al Qaeda terrorist group struck another blow to the Government of Saudi Arabia last week with the gruesome beheading of the American hostage, Paul Marshall Johnson.

The terrorist group is now increasingly using the Internet to send out visual messages and it posted a picture of the blindfolded American hostage wearing an orange tracksuit on an Arabic website. The orange tracksuit was meant to draw a link with the orange-tracksuit-clad detainees held by the American authorities at Guantanamo Bay detention centre in Cuba. An accompanying statement claimed that Johnson was killed because Muslims have suffered from American Apache helicopters and their rockets. Mr Johnson was a helicopter engineer for the US defence contractor, Lockheed Martin. The Al Qaeda also claimed that it is avenging the US abuse of prisoners at Abu Ghraib prison in Iraq.

Despite the terrorist attacks, there is no visible sense of anxiety or panic among Indians in Saudi Arabia. The Indian community in Saudi Arabia is the largest expatriate group in the country, numbering about 1.5 million, whose professions range from medical consultants to scientists, professors, economists and agricultural experts, apart from manual and domestic workers. Remittances from Indians in Saudi Arabia to India are to the tune of US $2 billion. The huge Indian community in the Gulf acts as a large market for the export of Indian goods and other services to the region.

There is potential for growth in Indo-Saudi ties. Both the countries have made tremendous efforts to develop bilateral relations in the past decade. There had been a certain cooling off in the relations in the early 1990s due to several reasons - from the destruction of the Babri Masjid to the Indian sympathy for the Iraqi regime during the first Gulf War. The Saudis saw Indian overtures to the newly independent Central Asian republics as being more in tune with Iran. The Indian side saw Saudi Arabia as more closely aligned with Pakistan. In spite of this, both sides have made considerable efforts to further political dialogue in the past few years.

The change in attitude was visible in the Pakistani newspaper reports of the Saudi Foreign Minister's response to a pointed question during a press conference in Pakistan last month. The Saudis have traditionally seen themselves as leaders of the Muslim world in their capacity as the protector of the Islamic holy places of Mecca and Medina. Asked what Saudi Arabia was doing about the discrimination against Muslims in India, the Saudi Minister retorted that Indian Muslims could look after themselves and they did not require any outside interference.

India and the GCC (Gulf Cooperation Council) have taken steps in the past one year to enhance ties between them. The GCC, which comprises Saudi Arabia, United Arab Emirates, Kuwait, Oman, Qatar and Bahrain, started a regular political dialogue at the level of senior ministers with India. The India-GCC Political Dialogue launched in September 2003 will be held annually in New York during the time when the United Nations General Assembly takes place. The GCC countries have also begun to invest in India, though the investment is largely in portfolio management, instead of larger projects where funds have a longer lock-in period.

The Saudis are careful investors and take their time in assessing the security and the likely returns of their investments. They have recently shown an interest in investing in India in specific projects. The Saudi Government would also welcome Indian investment in the country for it offers attractive terms and facilities for foreign investment. The Indo-Saudi Arabia Joint Commission is due to meet in Riyadh this September, when an Indian business delegation is also expected to visit Riyadh. Both India and Saudi Arabia have shown their willingness to strengthen bilateral ties.