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$ 10.4 billion in 2008-2009, of which non-oil trade accounted for approximately $1.2 billion while petroleum exports from Kuwait to India were approximately $9.1 billion. India has consistently been among the top ten trading partners of Kuwait. As per Indian Government sources, the trade during 2005-2009 and 2009-2010 (Apr-Dec) was as follows:

Total bilateral trade between India and Kuwait in US$ terms increased by 23.91% from US$ 8385.79 million in the year 2007-08 to US$ 10,391.24 million in 2008-09. In Rupee terms, it grew by 38.94% from Rs. 33,70,483.61 lakhs in 2007-08 to Rs. 46,82,785.12 lakhs in 2008-09. 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 imports from Kuwait went up by 24.53% from US$ 7704.25 million in 2007-08 to US$ 9,593.74 million in 2008-09. In Rupee terms, the imports rose by 39.53% from Rs. 30,95,993.03 lakhs to Rs. 43,19,944.55 lakhs in the corresponding period.

India’s imports from Kuwait (excluding POL) were US$ 399.96 million in 2008-09. A pie-chart showing the share of top 10 items of imports (excluding Petroleum & its products) from Kuwait during 2008-09 is given below. This shows the major items (other than Petroleum & its products) imported by India as Salt, Sulphur, earths and stone, plastering materials, lime and cement; Organic Chemicals; Iron & Steel; Fertilizers; Plastic and articles thereof; Aluminium and articles thereof; Miscellaneous goods; Ships, Boats and Floating Structures; Copper & articles thereof.

Kuwait is the largest supplier of crude oil to India from the Gulf region after Saudi Arabia. Indian imported Rs.  41,40,219.26 lakhs  (US$ 9.19  billion) worth of POL from Kuwait in the year 2008-09.

Total non-oil bilateral trade between India and Kuwait grew by 6.% from US$ 1,089.72 million in 2007-08 to US$ 1,155.76 million in 2008-09. In Rupee terms, it rose from Rs. 4,38,727.88. lakhs to Rs. 5,23,139.89 lakhs.

India-Kuwait Non-Oil Trade FYs 2007-10

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.

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.

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.

Until December 1997, the Kuwait Fund for Arab Economic Development (KFAED) extended concessional loans to India for 8 projects in various sectors to the extent of KD. 88.854 million (Rs. 10.61 billion) [Industry – 2 projects totaling Rs. 3.10 billion; Power – 5 projects totaling Rs. 6.71 billion and Agriculture – 1 project amounting to Rs. 0.80 billion]. The total loan advanced upto December 31, 2002, were US $ 270.17 Million. However, due to the change in policy in 2003-04, the loans from KFAED were discontinued and were repaid by the Indian government.

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, 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 [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].

On 23 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.

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 civil aviation relations. 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.

Kuwait Airways currently operates flights to Delhi, Mumbai, Chennai, Thiruvananthapuram, Kochi and Hyderabad. Kuwait’s private airline Jazeera Airways has operations to Delhi, Mumbai and Kochi. Air India operates flights to Chennai, Calicut, Mumbai, Ahmedabad, Goa and Hyderabad. Its subsidiary, Air India Express operates flights to Cochin, Calicut, Chennai, Mangalore and Thiruvananthapuram from Kuwait. Jet Airways flies daily to Kochi and Mumbai from Kuwait. National Aviation Services (NAS), a Kuwait based company, has been awarded handling contracts at 15 airports in India.