Bahrain is capitalising on the recent visit of Narendra Modi, Prime Minister of India, with the two countries signing a raft of collaboration agreements amid ongoing economic cooperation.
In late August Prime Minister Sheikh Khalifa bin Salman Al Khalifa completed comprehensive, delegation-level talks with Prime Minister Modi, who was on the third and final leg of a tour that also took in France and the UAE.
This was the first time a prime minister from India had visited the kingdom, which has a sizeable diaspora population of around 400,000 Indians and more than 3000 registered Indian-owned joint ventures.
Following the discussions, the heads of state signed memoranda of understanding (MoUs) on bilateral collaboration in the areas of space technology, solar energy and cultural exchange.
Concretely, Bahrain’s National Space Science Agency will work together with India’s Space Research Organisation, Bahrain will join the International Solar Alliance – of which India is already a signatory – and a cultural exchange programme will be developed.
The MoUs build on the existing relationship between the two countries, which enjoy strong bilateral trade ties. India is Bahrain’s fifth-biggest trading partner, and the value of their trade relationship – which currently stands at $1.3bn – has expanded steadily in recent years, including a rapid growth burst of 250% between 2005 and 2014.
See also: The Report – Bahrain 2019
Innovative technology central to bilateral relationship
Bahrain’s efforts to boost its technology, innovation and knowledge-based industries are driving the collaboration with India.
Among these are developing a start-up ecosystem through initiatives such as the tech-focused Al Waha Fund of Funds, launching of incubators and accelerators, and passing legal reforms such as the Reorganisation and Bankruptcy Law.
Key fields of interest include blockchain and distributed ledgers, artificial intelligence, big data and the internet of things. Given India’s ambition to develop these and other areas, the country is a priority market for Bahrain.
In the first half of this year eight new projects in Bahrain’s ICT sector were initiated by Indian companies, more than from any other country.
This is in part thanks to the efforts of the Bahrain Economic Development Board (EDB). Of the 16 investment promotion offices the EDB runs around the world, three are located in India, in New Delhi, Mumbai and Bangalore, the latter of which has been dubbed “India’s Silicon Valley”.
In December of last year an EDB-led economic delegation signed an agreement with the Indian state of Maharashtra to create a framework for cooperation in financial technology (fintech) innovation and knowledge exchange, and Khalid Humaidan, CEO of the EDB, is expected to lead a roadshow to India within a year.
David Parker, co-chief investment officer for financial services, ICT, start-ups and international offices at the EDB, told local media that at least 12 new Indian businesses were expected to set up in Bahrain by the end of the year as a result of EDB’s outreach.
In recent years Bahrain has been working hard to diversify its economy away from hydrocarbons. This drive is bearing fruit: according to an assessment carried out by the Arab Monetary Fund, non-oil revenue increased by 47% in the first half of 2019.
Bahrain has long been one of the Gulf’s most established financial centres, and financial services are a cornerstone of its diversification efforts. It has cemented its position as a regional fintech centre, and financial services now account for 17% of GDP.
The Central Bank of Bahrain has a dedicated fintech unit, and in 2017 it launched the region’s first onshore regulatory sandbox.
Belfrics, a global cryptocurrency exchange operating in seven countries, including Bahrain and India, is one of several fintech companies testing new approaches in the sandbox.
Further collaboration between the government and the private sector is key to Bahrain’s fintech strategy. One example of a public-private partnership is Bahrain FinTech Bay, the MENA region’s largest fintech hub and product of the collaboration between the EDB and Singapore’s FinTech Consortium.