India, GCC ink terms of reference for FTA negotiations

• India and the Gulf Cooperation Council (GCC), inked terms of reference for negotiations on Free Trade Agreement (FTA) on February 5.

• The terms of reference will guide the negotiations for the GCC-India FTA by defining its scope and modalities.

What is the Gulf Cooperation Council?

• The Gulf Cooperation Council (GCC) was established by an agreement concluded on May 25, 1981 in Riyadh among Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE in view of their special relations, geographic proximity and similar political systems.

• GCC comprises some of the fastest growing economies in the world, mainly due to an increase in oil and natural gas revenues coupled with a building and investment boom backed by reserves, etc.

The GCC Charter states that the basic objectives are to:

i) Have coordination, integration and inter-connection between Member States in all fields. 

ii) Strengthen ties between their peoples.

iii) Formulate similar regulations in various fields such as economy, finance, trade, customs, tourism, legislation, administration.

iv) Foster scientific and technical progress in industry, mining, agriculture, water and animal resources.

v) Establish scientific research centres.

vi) Set up joint ventures.

vii) Encourage cooperation of the private sector.

The structure of the GCC consists of:

• The Supreme Council which comprises the Heads of State of the six member countries.

• The Ministerial Council which comprises the foreign ministers of the six member countries.

• The Secretariat General which prepares reports, studies, accounts and budgets for the GCC.

• The Secretariat is located in Riyadh. 

India and GCC

• The Gulf constitutes the “extended” neighborhood of India separated only by the Arabian Sea. India has a long standing historic deep-rooted relationship with GCC countries. 

• The GCC countries are home to about 10 million strong Indian expatriate community and cultural and people-to-people ties between India and Gulf are bedrock of the bilateral relations. 

• The GCC is a major trade and investment partner for India. 

• Collectively, the GCC countries represent a market of 61.5 million people (2024) and $2.3 trillion in terms of GDP at current prices, ranking ninth globally in this category. 

• The GCC region is also a significant source of FDI for India, with cumulative investments exceeding $31.14 billion as on September 2025.

• The GCC’s substantial oil and gas reserves are of vital importance for India's energy security while defence and security cooperation with GCC has also been increasing. 

• India has already implemented a free trade pact with the UAE in May 2022.

• India and Oman also signed a Comprehensive Economic Partnership Agreement (CEPA) in Muscat on December 18, 2025.

Significance of India-GCC FTA

• Launch of FTA talks with the GCC would be a kind of resumption of the negotiations, as the earlier two rounds of negotiations were held in 2006 and 2008 between the two regions.

• The third round did not happen as GCC deferred its negotiations with all countries and economic groups.

• India imports predominantly crude oil and natural gas from the Gulf nations like Saudi Arabia and Qatar, and exports pearls, precious and semi-precious stones, metals, imitation jewellery, electrical machinery, iron and steel, and chemicals to these countries.

• In the last five years, India’s trade with the GCC has expanded steadily, registering an annual average growth rate of 15.3 per cent.

• India’s exports to the GCC grew by close to one per cent to about $57 billion in 2024-25 against $56.32 billion in 2023-24. 

• Imports rose by 15.33 per cent to $121.7 billion in 2024-25 from $105.5 billion in 2023-24.

• Bilateral trade has increased to $178.7 billion in 2024-25 from $161.82 billion in 2023-24.

• The UAE was India’s third-largest trading partner in the last fiscal.

• Saudi Arabia was India’s fifth-largest trading partner during the last fiscal.

• Qatar ranked as India’s 22nd-largest trading partner last fiscal. 

• Oman was the 28th largest trading partner of India in 2024-25. 

• Kuwait ranked 29th among India's trading partners in 2024-25. 

• Bahrain was the 65th largest trading partner of India.

(The author is a trainer for Civil Services aspirants.)