India and Gulf Cooperation Council Launch Formal FTA Negotiations
In a significant development for international trade, India and the six-nation Gulf Cooperation Council (GCC) have taken a major step toward strengthening their economic partnership. On Thursday, both sides signed the terms of reference (ToR) to formally begin negotiations for a proposed free trade agreement (FTA), marking a pivotal moment in their bilateral relations.
Formalizing the Framework for Enhanced Trade
The signing ceremony, presided over by Commerce and Industry Minister Piyush Goyal, established the official framework for upcoming negotiations. The ToR document outlines the comprehensive scope and modalities of the proposed trade pact, setting the stage for detailed discussions between the two economic powerhouses.
The GCC bloc comprises six influential Middle Eastern nations: Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman, and Bahrain. This collective represents one of India's most important trading partners in the region.
Historical Ties and Modern Economic Ambitions
Minister Goyal emphasized the deep historical connections between India and the Gulf region, noting that "the two trading partners have been trading amongst each other for over 5,000 years." He highlighted the contemporary significance of approximately 10 million Indians currently living and working across GCC nations, creating strong people-to-people connections that complement economic ties.
"It is most appropriate that we now enter into a much stronger and robust trading arrangement which will enable a greater free flow of goods, services, bring predictability and stability to policy, help encourage a greater degree of investments," Goyal stated during the announcement.
Complementary Economic Strengths
The proposed agreement is strategically positioned to leverage the complementary strengths of both regions. While India stands as one of the world's major food grain producers, GCC countries are key global exporters of oil and natural gas. This natural synergy creates opportunities for enhanced food and energy security for both sides.
Goyal pointed to the existing robust trade relationship, which reached nearly $179 billion in bilateral trade during the 2024-25 fiscal year. "I believe a number of products and services required by the GCC countries can be provided by our young, very talented and skilled Indians, as the GCC countries can help us with further diversification and growth of our energy sources," he explained.
Expected Benefits and Sectoral Opportunities
The proposed FTA is expected to deliver multiple benefits through the elimination of duties and reduction of non-tariff barriers. Key sectors poised to benefit include:
- Infrastructure Development: Enhanced cooperation in infrastructure projects across both regions
- Petrochemical Industry: Significant growth opportunities for India's petrochemical sector
- Information Technology: Expanded market access for Indian ICT firms in the rapidly growing GCC market
- Skilled Workforce: Greater opportunities for India's talented professionals in GCC nations
Building on Existing Trade Agreements
India has been actively pursuing trade agreements with GCC nations individually. The country has already implemented a free trade pact with the UAE in May 2022 and signed a Comprehensive Economic Partnership Agreement (CEPA) with Oman in December 2025. According to Goyal, India has concluded nine trade pacts in recent years, covering 38 developed nations.
Strategic Timing Amid Global Uncertainties
GCC chief negotiator Raja Al Marzouqi emphasized the significance of the pact in the current global economic context. "So it's a message, it's a signal for the whole globe, and it's important for us at this time to try to be more cooperative to avoid any risk that our global economy is facing as a result of uncertainty," he remarked.
India's negotiating team will be led by Additional Secretary in the Department of Commerce Ajay Bhadoo, who will serve as the chief negotiator for the pact.
Resuming Long-Standing Negotiations
The launch of formal negotiations represents a resumption of earlier discussions that began nearly two decades ago. Two preliminary rounds were held in 2006 and 2008 before the GCC deferred negotiations with multiple countries and economic blocs. The renewed talks signal a renewed commitment to deepening economic integration.
Current Trade Dynamics and Future Potential
The trade relationship between India and GCC nations shows strong growth momentum:
- India's exports to the GCC increased nearly 1% to approximately $57 billion in 2024-25
- Imports from GCC nations grew significantly by 15.33% to $121.7 billion during the same period
- Total bilateral trade reached $178.7 billion in 2024-25, up from $161.82 billion in the previous fiscal year
Major trading relationships within the GCC include:
- The UAE as India's third-largest trading partner with $36.63 billion in exports and $63.40 billion in imports
- Saudi Arabia as India's fifth-largest trading partner with $11.75 billion in exports and $30.12 billion in imports
- Qatar as India's 22nd-largest trading partner, primarily supplying liquefied natural gas (LNG)
- Oman, Kuwait, and Bahrain as important trading partners with growing economic connections
The trade pattern reveals India's significant imports of crude oil and natural gas from Gulf nations, while exporting diverse products including pearls, precious stones, metals, electrical machinery, iron and steel, and various chemicals.
As negotiations progress, both sides anticipate that the FTA will create a more predictable and stable policy environment, encouraging greater investment flows and strengthening the already substantial economic partnership between India and the Gulf Cooperation Council.
