New Delhi: After sealing the significant FTA with the European Union and a trade pact with the US, India has now turned to the Gulf.
According to reports, India and the Gulf Cooperation Council (GCC) have formally signed the Terms of Reference (ToR) to resume negotiations for a free trade agreement in New Delhi on Thursday.
The ToR was inked in the presence of commerce minister Piyush Goyal, India’s additional secretary Ajay Bhadoo, and GCC’s chief negotiator Raja Al Marzouqi, reported News 18. The first formal round of negotiations is expected to take place in Riyadh. Saudi Arabia has offered to host.
Know the deal’s backdrop
The FTA process that India and the GCC have now restarted builds on a negotiation track that first opened in 2004, reported News 18. It had continued through rounds in 2006 and 2008. But it was suspended in 2011 when the GCC had suspended all trade talks globally. Discussions were revived in 2022. In 2023, the GCC sent a revised draft of the ToR, eventually leading to the signing of the ToR on Thursday.
India’s edge over Pakistan & the Turkey factor
India’s renewed engagement with the GCC is significant, considering the timing as it comes when Pakistan is grappling with severe economic pressures. The neighbouring country is also simultaneously trying to reposition itself as a defence and security partner for Gulf nations.
According to recent reports, Islamabad had attempted to ease its financial burden by offering military equipment and defence arrangements in lieu of cash repayments. However, a major hind
rance to Pakistan’s ambitions may be Turkey as the latter has stepped back from Islamabad’s effort to build a broader Islamic defence bloc, involving Saudi Arabia, reports claimed.
Considering these factors, India’s expanding economic engagement with the GCC bolsters New Delhi’s image as a stable, investment-driven and forward-looking partner. This is in sharp contrast to Pakistan’s debt-linked overtures. A full-fledged India–GCC trade pact would further tie Gulf economies to India’s growth trajectory, experts opined. This will further narrow the strategic room available to Islamabad in the region.
What trade stats show?
According to reports, bilateral trade between India and the GCC has increased over the past few years. In 2021–22, it stood at around $155 billion. In 2022–23, the figure jumped to nearly $185 billion. In 2023–24, trade was valued at $162 billion. In 2024–25, India-GCC trade reached $178.7 billion, reported News 18. It has been also mentioned in the same report that the UAE was India’s third-largest trading partner last fiscal.
Significance of the FTA
“It is most appropriate that we now enter into a much stronger and more robust trading arrangement, which will enable a greater free flow of goods and services, bring predictability and stability to policy, and help encourage a greater degree of investment,” Piyush Goyal had said.
According to the minister, the agreement will also encourage food and energy security in the GCC nations as well as ensure energy security for India. India is a major food grain producer in the world. On the other hand, GCC nations are oil and gas exporters.
“We already have a very robust, nearly $179 billion bilateral trade. I believe several 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 said.