After nearly 20 years of starts and stops, India and the Gulf Cooperation Council (GCC) have agreed on the Terms of Reference (ToR) for a proposed free trade agreement, a move that brings long-stalled negotiations back into focus.
The ToR to be finalised by Commerce Minister Piyush Goyal and GCC representatives on Thursday, sets out the scope and structure for future talks and clears one of the key procedural hurdles that had kept the deal in cold storage.
The timing is hard to miss. The breakthrough comes soon after India wrapped up its free trade agreement with the European Union and days after New Delhi announced progress towards a trade deal with the United States.
A Long-Pending Deal
India and the GCC (Saudi Arabia, the UAE, Qatar, Kuwait, Oman and Bahrain), first discussed a trade pact in the early 2000s. A framework agreement was signed in 2004, and negotiations began two years later, but talks lost momentum by 2008.
Over time, differences over tariff reductions, investment protection and internal GCC priorities slowed progress. Recently, Saudi Arabia’s preference for a bilateral investment treaty before advancing the FTA became a sticking point.
India argued for keeping the two tracks separate, wary of reopening older investment obligations. The decision to delink the BIT from the FTA framework appears to have helped break the impasse.
Why the FTA Matters
The GCC is already one of India’s most critical economic partners, even without a trade agreement. The region accounts for nearly 35% of India’s crude oil imports and about 70% of its gas imports, anchoring a relationship built largely on energy security.
Beyond energy, the Gulf is home to nearly nine million Indian workers, making it a major source of remittances and employment. And trade with the GCC focuses on hydrocarbons.
However, lower tariffs and stronger rules could help Indian exports of engineering goods and chemicals to food products and textiles, that are gradually gaining traction in Gulf markets. Also, services, including IT, healthcare and logistics, are expected to feature prominently.
GCC investments in India are estimated at over $18 billion, with growing interest in infrastructure, renewable energy, military platforms, data centres and logistics.
How The GCC Benefits
For GCC countries, many of which are actively trying to diversify and cut down dependence on oil revenues, India offers scale.
It is a large and growing consumer market, a competitive manufacturing base and a potential partner in downstream industries.
Easier access to India could help Gulf firms expand beyond energy into manufacturing, processing and services, while strengthening the region’s role as a trade and investment hub linking Asia, Africa and Europe.
Why Talks Are Moving Again
The revival of India–GCC discussions also reflects a change in New Delhi’s approach to trade deals. Rather than waiting for broad, bloc-wide agreements to come together, India has increasingly pursued faster, outcome-driven pacts.
The India–UAE CEPA, signed in 2022, set the template. A trade agreement with Oman was inked last year, while discussions with Qatar are underway.
India’s progress with the EU and the US has added to the momentum, reinforcing the view within the government that trade agreements can serve both economic and strategic objectives. Against that backdrop, re-engaging the GCC—India’s largest regional trading partner, has become harder to postpone.
Agreeing on the Terms of Reference does not guarantee a quick deal. Negotiations will still have to navigate sensitive areas such as tariff cuts, standards, services access and regulatory issues. Internal alignment within the GCC will also be crucial.
Still, with bilateral trade already crossing $180 billion annually and energy, labour and investment ties deeply entrenched, both sides appear to have concluded that the cost of delay now outweighs the risk of negotiation.
Whether the FTA ultimately delivers will depend less on announcements and more on how quickly talks move from framework to substance.
