How to Profit from Saudi Arabia's New Business Boom | Sarthak Ahuja | Business Class

Executive summary

Sarthak Ahuja argues that Saudi Arabia is shifting from a “builders’ economy,” driven by giga-projects, toward a “buyers’ economy” focused on developing domestic industries and sourcing products, technology, and expertise. He sees this shift as an opportunity for Indian companies—especially SMEs—to enter the market while some competitors are reconsidering their presence.

His recommended approach is to identify a relevant sector, find a local B2B buyer or distributor, validate pricing and compliance, build relationships in person, and consider local manufacturing or a Saudi entity only after testing demand.

Five sectors highlighted

• AI and data centers: Indian IT businesses can develop AI applications, interfaces, and industry-specific tools without creating foundational AI models. Data centers may require substantial capital.
• Food security: Opportunities include food processing, agri-tech, cold-chain infrastructure, and local manufacturing as Saudi Arabia seeks to reduce dependence on food imports.
• Pharmaceuticals and supplements: Ahuja points to interest in local production of medicines and supplements, including vitamin D products.
• Defense: Saudi Arabia is seeking to increase domestic production of defense equipment. Ahuja identifies opportunities around manufacturers such as SAMI.
• Finance and fintech: Potential areas include digital financial services, Islamic finance, financial education, and customer-acquisition channels for finance and banking products.

Market context and priority locations

Market context

Ahuja cites approximately $42 billion in annual India–Saudi trade, consisting of roughly $12 billion in Indian exports and $30 billion in imports from Saudi Arabia. He also refers to about $100 billion in recently signed MOUs.

He cites a Saudi population of about 36 million, approximately 60% Saudi nationals and 40% expatriates, and estimates that 2.5 million Indians live in the country.

Cities and business focus

• Riyadh: Government, regional headquarters, professional services, and growing corporate activity. Ahuja says the population is about 8 million and cites a government estimate of roughly 15 million by 2030.
• Jeddah: Red Sea trade, logistics, food and beverage, and a key port for imports.
• Mecca and Medina: Hospitality, food, and transportation serving residents and visitors. Ahuja cites roughly 9 million residents and 10 million annual visitors.
• Dammam: Oil infrastructure and exports.

Suggested market-entry playbook

1. Start with B2B. Ahuja says direct customer acquisition can be difficult, so businesses should first find an importer, distributor, or other business buyer.
2. Pitch a longer-term partnership. Alongside an initial wholesale deal, offer to help the buyer establish local manufacturing. Ahuja argues this may be more compelling than competing solely on low prices.
3. Use B2C trends to identify B2B products. Consumer shifts he highlights include growing demand for modest fashion and apparel, a strong café and food-service culture, and rising interest in health, wellness, and nutraceuticals.
4. Work through local distribution to reach retailers. Access to chains such as Carrefour, Lulu, and Panda generally requires a local distributor, who may also assist with product labeling and compliance.
5. Test before committing heavily. Attend relevant trade fairs as a visitor first. Consider buying a booth only after making initial visits and building useful contacts.
6. Build relationships deliberately. Ahuja characterizes Saudi business culture as relationship-led. He recommends seeking warm introductions, allowing time for informal conversation, and arranging senior-level follow-up rather than pushing for a deal in the first meeting.
7. Maintain professional visibility. He recommends an active social-media presence, particularly on LinkedIn and Instagram, so potential Saudi partners can discover a company’s expertise and capabilities.

Pricing, costs, and compliance

Ahuja recommends working backward from the realistic Saudi selling price, rather than simply adding a markup to Indian production costs.

Illustrative cost assumptions

• Sea shipping: approximately 15–20% at a minimum.
• Customs duty: commonly around 5%, but cited as ranging from 0–15%, depending on the product.
• VAT: 15%.
• Distributor and retailer margins: allow at least 40% in his example.

For a product expected to retail for the equivalent of ₹300, Ahuja estimates that about ₹180 remains as the cost envelope after channel margins. He suggests checking whether a Saudi landed cost around ₹180 can be supported by an Indian FOB cost near ₹100. He also gives a rough example in which a ₹60 FOB cost could become about ₹120 landed in Saudi Arabia, before further channel costs.

Product certifications

Ahuja describes two Saudi Standards and Quality Organization (SASO) certification requirements:

• Product certification, typically valid for a year.
• Shipment certification, required for each shipment.

He says certification details are recorded through the SABER portal for customs checks. Certification and labeling costs should be included in product economics.

Entity setup, tax, and contract risks

Ownership and licensing

Ahuja says 100% foreign ownership may be possible through a MISA license, but capital requirements vary by activity. He describes service-business requirements as relatively modest and trading or goods-related requirements as potentially running into millions of riyals.

A local partner may reduce the capital burden for a trading business. However, Ahuja warns against using someone’s name merely as a nominal local partner. He says “tasattur”—a concealed or improper ownership arrangement—is a criminal offense and cites possible penalties of up to five years in prison and SAR 5 million in fines, as well as deportation or an entry ban.

Taxes, as described by the speaker

• Personal income tax: 0%.
• Corporate tax on foreign-owned shares: 20% of the foreign share of profits.
• Zakat on Saudi or GCC-owned shares: 2.5% of their share of profits.
• VAT: 15%.

Commercial agency and intellectual property

• Make distributor agreements explicitly non-exclusive. Ahuja warns that, if exclusivity is not addressed, a distributor may be treated as exclusive, making termination costly.
• Register the company’s trademark in Saudi Arabia with SAIP, rather than allowing a distributor to register it in their own name.

Ahuja offers a rough benchmark that setting up and maintaining a Saudi entity may cost about four times as much as in the UAE.

These are the presenter’s descriptions of legal, tax, and compliance matters. Companies should verify current requirements with qualified Saudi advisers before acting.

Finding buyers and partners

Trade fairs and expos

Ahuja recommends matching events to the relevant sector:

• LEAP for technology.
• Money20/20 Middle East for finance and fintech.
• Saudi Food Show and Saudi Food Manufacturing Show for food.
• World Defense Show for defense technology.
• A gaming event, which he describes as an emerging opportunity.

Trade desks, business groups, and delegations

Ahuja suggests contacting the Indian Embassy in Riyadh and the Indian Consulate in Jeddah, whose trade desks may help with introductions and matchmaking. He also points to FICCI, CII, and Indian export promotion councils.

Export-promotion council delegations may offer booth or travel support, sometimes on a reimbursement basis. Ahuja says reimbursements may take 60–90 days.

Future Investment Initiative

Ahuja describes the Future Investment Initiative (FII), held in October, as a major policy and investment gathering, but notes that attendance and hotel costs can be high. He recommends prioritizing sector-specific expos and attending as a visitor before investing in a booth or an expensive event.

Presenter and sources mentioned

Presenter: Sarthak Ahuja.

Organizations and sources referenced: Saudi Vision 2030; Saudi Council of Ministers; SAMI; SASO; SABER; MISA; SAIP; the Indian Embassy in Riyadh; the Indian Consulate in Jeddah; FICCI; CII; Indian export promotion councils; and the trade events LEAP, Money20/20 Middle East, Saudi Food Show, Saudi Food Manufacturing Show, World Defense Show, and FII. Ahuja also quotes Warren Buffett.