SYLLABUS
GS-2: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
Context: Recently, India and the Gulf Cooperation Council (GCC) have signed the Terms of Reference (ToR) in New Delhi, formally launching negotiations for a Free Trade Agreement (FTA) between India and the six-nation Gulf bloc.
Key Highlights of the Agreement
- Framework for Negotiations: The ToR defines the scope, objectives, and modalities of the proposed FTA, covering trade in goods, services, and investment.
- Scale of Economic Engagement: India–GCC goods trade stood at USD 178.56 billion in FY 2024–25 (Exports: USD 56.87 bn; Imports: USD 121.68 bn), accounting for 15.42% of India’s global trade.
- Sectoral Coverage: Key sectors expected to benefit include food processing, infrastructure, petrochemicals, textiles, gems and jewellery, machinery, and ICT.
- Investment Linkages: The GCC is a major source of capital, with cumulative FDI inflows into India exceeding USD 31.14 billion.
- Institutional Continuity: India already has trade agreements with UAE and Oman and is in negotiations with Qatar, indicating growing economic integration with the region.
Significance
- Energy and Food Security: The FTA is expected to enhance the stability and diversification of India’s energy supplies from a region that is a major source of crude oil, natural gas, and petrochemicals, while positioning India as a reliable food supplier to the GCC.
- Geopolitical and Strategic Value: The agreement strengthens India’s engagement with a strategically vital region amid global economic uncertainty, reinforcing predictability and long-term partnership.
- Diaspora and Services Linkages: With nearly 10 million Indians living and working in GCC countries, the FTA can deepen services trade, remittances, and people-to-people ties.
- Growth and Employment: By improving market access and investment flows, the agreement is expected to boost manufacturing, infrastructure development, and job creation in both India and the GCC.
About the Gulf Cooperation Council (GCC)
- The Gulf Cooperation Council (GCC), formally known as the Cooperation Council for the Arab States of the Gulf, is a political and economic alliance of six Middle Eastern countries: Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman, and Bahrain.
- It was established in May 1981 in Riyadh, Saudi Arabia, to promote unity and cooperation rooted in shared Arab and Islamic cultural identity.
- Objectives:
- As per Article 4 of the GCC Charter, the Council seeks to strengthen relations among member states and promote cooperation among their citizens across political, economic, security, and social domains.
- The presidency of the GCC rotates annually among member states.
- The bloc is a global energy giant, controlling approximately 30% of the world’s oil reserves and a significant portion of its natural gas. It has a combined GDP of over $2.25 trillion.
- It is governed by three main bodies: the Supreme Council (heads of state), the Ministerial Council (foreign ministers), and the Secretariat General (the administrative arm).
Some of the key Free trade agreements of India
- India–European Union (EU) FTA: Signed in January 2026 after nearly 20 years of talks, this deal eliminates tariffs on over 90% of goods and covers roughly 99.5% of India’s export value to the EU.
- India–Oman CEPA: Formally signed on December 18, 2025, this Comprehensive Economic Partnership Agreement (CEPA) grants duty-free access to 99.38% of Indian exports and is set for implementation in early 2026.
- India-UK FTA negotiations were launched in January 2022.
- The India-Australia Comprehensive Economic Cooperation Agreement (CECA) builds on the foundation laid by the India-Australia Economic Cooperation and Trade Agreement (ECTA), which came into force in December 2022.
- India-UAE Comprehensive Partnership Agreement (CEPA): It is in effect from May 2022.