India and Gulf Cooperation Council Set Stage for Landmark Free Trade Agreement
- MGMMTeam
- 6 hours ago
- 4 min read
India and the Gulf Cooperation Council (GCC) have taken a decisive step toward strengthening their economic and strategic partnership by agreeing on the Terms of Reference (ToR) to formally begin negotiations for a comprehensive Free Trade Agreement (FTA). The move clears the path for long-awaited talks and signals a renewed push to deepen India’s engagement with one of the world’s most economically and energy-rich regions.
The announcement was confirmed by Union Commerce and Industry Minister Piyush Goyal, who described the development as a significant milestone in India’s expanding global trade strategy. The GCC includes Saudi Arabia, the United Arab Emirates (UAE), Qatar, Kuwait, Oman, and Bahrain — all of which play a vital role in India’s trade, energy security, and investment landscape.
Revival of Long-Pending Negotiations
Trade negotiations between India and the GCC are not new. The two sides had signed a framework agreement as early as 2004, and formal negotiations were initiated in 2006 and 2008. However, the process was stalled in 2011 after the GCC paused several of its global trade negotiations.
Momentum returned in recent years following high-level diplomatic engagements. The GCC Secretary General’s visit to India in 2022 and continued exchanges of revised draft frameworks in 2023 and 2024 helped rebuild trust and alignment. The signing of the Terms of Reference in February 2026 now formally revives the process and provides a structured roadmap for full-scale negotiations to begin in the near future.
Trade Volumes Highlight Economic Weight
The GCC is among India’s largest and most important regional trading partners. In FY 2024-25, bilateral trade between India and the GCC reached approximately $178.5 billion, accounting for over 15 percent of India’s total global trade. Imports, largely driven by crude oil, natural gas, and petrochemical products, were valued at around $121.6 billion, while exports stood at nearly $56.9 billion.
Within the bloc, the UAE remains India’s largest trading partner, with bilateral trade crossing the $100 billion mark. Saudi Arabia ranks second, followed by Qatar, Oman, Kuwait, and Bahrain. These figures underscore the economic importance of the Gulf region for India’s growth, industrial needs, and energy requirements.
Investment, Supply Chains, and Growth Opportunities
Beyond trade in goods, GCC countries are also increasingly important sources of foreign investment into India. Cumulative investments from GCC nations have crossed $28 billion, reflecting growing Gulf interest in India’s infrastructure, technology, manufacturing, and services sectors.
The proposed FTA is expected to further enhance these flows by reducing tariffs, addressing non-tariff barriers, and creating a more predictable regulatory environment. Officials believe this will strengthen supply chains, improve ease of doing business, and provide new growth opportunities for Indian companies, particularly small and medium-sized enterprises.
Strategic Importance for Energy and Food Security
The Gulf region plays a central role in India’s energy security, supplying a large share of India’s crude oil and liquefied natural gas (LNG) imports. A deeper trade framework is expected to help India stabilize and diversify energy supplies while strengthening long-term energy partnerships.
In addition, closer economic integration could support India’s food security strategy by improving agricultural and food-processing exports to Gulf markets, where demand for reliable food imports continues to grow.
Role of the Indian Diaspora
The GCC is home to one of the largest Indian diaspora communities in the world, with nearly nine million Indians living and working across the six Gulf nations. These communities contribute significantly through remittances, professional expertise, and people-to-people ties.
A comprehensive FTA is expected to further support employment, professional mobility, and business opportunities for Indian workers and entrepreneurs in the region, strengthening both economic and social linkages.
Part of India’s Broader Global Trade Strategy
The India-GCC FTA is a key part of New Delhi’s broader effort to expand its network of high-quality trade agreements. In recent years, India has concluded or advanced FTAs with major partners including the UAE, Australia, the UK, the European Union, EFTA countries, and New Zealand.
Policymakers view the GCC deal as strategically important not only for trade, but also for enhancing India’s geopolitical presence in the Middle East and strengthening its role in global supply chains.
The MGMM Outlook
India’s decision to formally launch Free Trade Agreement negotiations with the Gulf Cooperation Council marks a major step in strengthening economic and strategic ties with one of the world’s most critical energy and investment regions. With the Terms of Reference now finalized, long-stalled talks have been revived, reflecting renewed political will on both sides. The GCC’s importance to India is evident in massive trade volumes, deep energy dependence, and the growing role of Gulf nations in India’s investment ecosystem. This move signals India’s intent to secure long-term access to energy, expand export markets, and position itself more firmly within Middle Eastern economic networks.
The proposed FTA is also expected to improve supply chains, reduce trade barriers, and create stronger conditions for Indian businesses, including small and medium enterprises, to compete in Gulf markets. Beyond trade, the agreement aligns with broader strategic goals such as strengthening energy security, enhancing food exports, and deepening cooperation in infrastructure, manufacturing, and technology. With millions of Indians working across GCC countries, closer economic integration is likely to reinforce employment, remittances, and people-to-people ties, making the partnership not just commercially important, but strategically central to India’s long-term regional and global ambitions.
(Sources: Firstpost, Business Today, Business Standard)
Comments