SYLLABUS

GS-2: Bilateral Agreements involving India and/or affecting India’s interests.

GS-3: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Context: Recently, India and the Gulf Cooperation Council (GCC) formally launched negotiations for a comprehensive Free Trade Agreement (FTA) with the signing of a Joint Statement in New Delhi. 

More on the News 

• The Joint Statement was signed by Union Minister of Commerce and Industry Piyush Goyal and GCC Secretary General Jasem Mohamed Albudaiwi.

• The Joint Statement follows the signing of the Terms of Reference (ToR) earlier in February 2026, which sets the framework for negotiations.

• Negotiations will cover goods, services, investments, rules of origin, and dispute settlement, building on prior bilateral FTAs like India-UAE (2022).

• The move comes amid global economic uncertainties and supply-chain realignments, reflecting India’s push to deepen strategic trade partnerships in West Asia.

India–GCC Trading Relations

• The GCC is India’s largest trading partner bloc, with bilateral trade reaching approximately USD 178.6 billion in FY 2024–25, accounting for 15.42% of India’s global trade.

• India’s exports to GCC account for USD 56.9 billion, while imports account for USD 121.7 billion.

• Key exports from India to GCC include engineering goods, rice, textiles, machinery, gems and jewellery, while key sectors of imports from GCC primarily comprise crude oil, LNG, petrochemicals, and precious metals such as gold.

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

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

• Nearly 10 million Indians reside in GCC countries, forming one of the largest overseas Indian communities globally and strengthening remittance flows and people-to-people ties. 

Significance of the Proposed FTA

• Energy Transition & Strategic Stability: Anchors long-term hydrocarbon supplies while expanding cooperation in grid interconnections and petrochemicals, thus supporting India’s energy security during its transition phase. 

• Export Expansion & MSME Integration: Tariff rationalisation and streamlined standards can widen market access for Indian MSMEs in sectors like pharmaceuticals, engineering goods, food products, textiles, and digital services, aiding export diversification. 

• Investment Flows & Infrastructure Financing: Deepens engagement with GCC sovereign wealth funds and institutional investors, catalysing capital inflows into infrastructure, logistics, manufacturing clusters, and emerging sectors. 

• Supply Chain & Logistics Connectivity: Integrates India into West Asia–centric trade corridors linking Asia, Europe, and Africa, enhancing supply chain resilience and reducing trade transaction costs. 

• Strategic & Geoeconomic Convergence: Aligns with GCC economic diversification agendas (e.g., Vision 2030 frameworks) and India’s Viksit Bharat ambitions, potentially elevating bilateral trade toward the USD 200+ billion trajectory over the decade. 

About the Gulf Cooperation Council (GCC)

• Established in 1981, the GCC is a regional intergovernmental political and economic union comprising six member states, namely, Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman, and Bahrain.

• Formed in the background of heightened regional instability, particularly after the 1979 Iranian Revolution and the Iran–Iraq War (1980–1988), it aims to strengthen collective security and regional cooperation among Gulf states. 

• The GCC has a combined GDP of approximately USD 2.3 trillion and a population of around 61.5 million. 

• The GCC’s highest authority is the Supreme Council, comprising the Heads of State of member countries. The presidency rotates annually among members in alphabetical order.

• Its Secretariat is headquartered in Riyadh, Saudi Arabia. 

Sources:
DD News
PIB
GCC
MEA
PRS India