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 References 14

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 a variety 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 of increasing 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 a representation of ideas of the manufacturing country. An international market increases
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competition to such an extent that companies look forward only to maximize their profits. This leads to damage of the environment and exploitation of natural resources. As such a balance needs to be maintained between increasing levels of foreign trade and preserving the environment.

OPEC Economies: An overview

OPEC stands for Organization of the Petroleum Exporting Countries. It came into being in 1960 when five countries namely Iran, Iraq, Kuwait, Saudi Arabia and Venezuela who came to be known as the Founding members of the organization signed an agreement. The organization was later joined by Qatar, Indonesia, Libya, UAE, Algeria, Nigeria, Ecuador, Gabon and Angola. There are 12 member countries in OPEC at present. It has its headquarters at Vienna, Austria. There are two kinds of members in OPEC-Founder members and Full members. It states that any country whose major export is crude petroleum and whose interests are aligned with the members of the organization can become a part of OPEC with the application is accepted by a majority of three fourths of the Full Members along with the consent of the Founder Members. It also provides provision for associate countries who are not admissible for full membership but given certain privileges under special conditions. OPEC countries hold a majority of the world crude oil reserves. They held 1200 billion barrels of oil in 2012 which accounted for nearly 81% of the total world crude oil reserves as compared to the non OPEC countries which held 277 billion barrels which constitutes only 19% of the world oil reserve. Among the OPEC countries Venezuela has the highest reserve with 24.8% followed by Saudi Arabia at 22.1%.Iran and Iraq hold 13.1% and 11.7% respectively.

World Crude Oil Reserves 2012

Non OPEC 19%

OPEC 81%

Qatar, 2.1

Algeria , 1

OPEC Oil Reserves

Angola , 0.8 Ecuador, 0.7 Venezuela Saudi Arabia Iran Iraq Kuwait United Arab Emirates Libya Nigeria Qatar Algeria Angola Ecuador

Nigeria, 3.1 United Arab Emirates, 8.1 Libya, 4

Venezuela, 24.8 Kuwait, 8.5 Saudi Arabia, 22.1 Iraq, 11.7

Iran, 13.1

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, visit from 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
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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.
Year Imports from Saudi Arabia Exports to Saudi Arabia Total trade % increase in bilateral trade % increase in Indian imports % increase in Indian exports 20072008 19,470.30 3,711.16 23,181.46 20082009 19,972.74 5,110.38 25,083.12 8.2 20092010 17,097.57 3,907.00 21,004.57 -16.26 20102011 20,385.28 4,684.40 25,069.68 19.35 20112012 31,060.10 5,683.29 36,743.40 46.57 20122013* 33,410.96 9,779.97 43,190.93 17.54

2.58

-14.4

19.23

52.37

7.56

37.7

-23.55

19.9

21.32

72.08

(in million USD)

50,000.00 45,000.00 40,000.00 35,000.00 30,000.00 25,000.00 20,000.00 15,000.00 10,000.00 5,000.00 0.00

Imports from Saudi Arabia Exports to Saudi Arabia Total trade

Iran
India Iran 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 5

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.
2006-07 Year Indias exports to Iran Indias imports from Iran Total Trade Trade Balance Total trade growth rate (%) 59,321.19 -88521.8 42.17 118401 15.7 109621.5 118632.9 -10.17 0.2 1446.48 2007-08 1943.92 2008-09 2534.01 2009-10 1853.17 2010-11 2492.9 2011-12 1903.29

7618.55

10943.61 12376.77 11540.85 10928.21

8592.66

9065.03

12887.52 14910.78 13394.01 13421.12 10495.95

(in million USD)

16000 14000 12000 10000 Indias exports to Iran 8000 6000 4000 2000 0 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Indias imports from Iran Total Trade

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
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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 EXPORT IMPORT TOTAL TRADE %Growth (Total ) %Growth (Exports) %Growth (Imports) 20072008 20082009 20092010 20102011 20112012 20122013

15,636.91 24,477.48 23,970.40 33,822.39 35,925.52 36,265.15 13,482.61 23,791.25 19,499.10 32,753.16 35,790.39 38,436.47 29,119.52 48,268.72 43,469.50 67,575.55 71,715.91 74,701.62 40.83 30.07 55.77 65.76 56.54 76.46 -9.94 -2.07 -18.04 53.15 41.1 67.97 7.72 6.22 9.27 4.16 0.95 7.39

(in million USD)

80,000.00 70,000.00 60,000.00 50,000.00 EXPORT 40,000.00 30,000.00 20,000.00 10,000.00 0.00 2012-2013 IMPORT TOTAL TRADE

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. Indias relations with Iraq suffered due to US sanctions on Iraq but India found a way with Oil-forfood 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.

200708 Indian Exports to Iraq Indian Imports from Iraq Total Trade

200809

200910

201011

201112

201213

271.1

430.8

477.1

674.9

773.9

1241.6

6829.2

7454.4

7013.1

8993.6

18916.1

20090.0

7100.3

7885.2

7490.2

9668.5 19690.0

21331.5 8

(in million USD)

25000.0

20000.0

15000.0

Exports Imports

10000.0

Total Trade

5000.0

0.0 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

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 trade with 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.

200708 Indian Exports to Kuwait

200809

200910

201011

201112

681.54

797.5

782.45

1856.01*

1,181.41

Indian Imports from Kuwait Total

7,704.25 8,385.79

9593.74 10,391.24

8,249.49 9,031.94

10,313.64 12,169.65

16,375.37 17,556.78

(in million USD)

20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 Indian Exports to Kuwait Indian Imports from Kuwait Total

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 afroAsian 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.

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2007-08 Indian Exports to Indonesia Indian Imports from Indonesia Total Trade

2008-09

2009-10

2010-11

2011-12 2012-13

2159.1

2517.3

3078.3

5689.9

6698.4

5332.8

4823.7 6982.8

6686.0 9203.3

8643.8 11722.1

9906.4 15596.4

14556.5 21254.9

14518.0 19850.8

(in million USD)

25000.0

20000.0

15000.0

Exports Imports

10000.0

Total Trade

5000.0

0.0 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

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
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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 biggest buyers 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
http://jpkc.szpt.edu.cn/english/supplement/international%20trade9.htm http://www.investopedia.com/articles/03/112503.asp http://www.opec.org/opec_web/en/about_us/25.htm http://www.thehindubusinessline.com/industry-and-economy/india-iraq-to-turnenergy-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.sa Content.aspx ID 867 http://www.indianembassy-tehran.ir/india-iran_relations.php

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