Could the long-discussed FTA between India and the GCC (Gulf Cooperation Council) move forward during Prime Minister Modi’s Jeddah visit? At a special media briefing, Foreign Secretary Vikram Misri underlined the importance of the agreement.
“The GCC-FTA will be discussed during this visit as well as to what are the prospects that we see for an India-GCC FTA,” Misri told StratNewsGlobal, highlighting both its strategic and commercial relevance.
The GCC, a regional alliance of Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman, and Bahrain, is India’s top trading bloc. Trade between the two sides reached $161.59 bn in 2023-24. Imports, dominated by crude oil and natural gas, accounted for $105.3 bn, while exports from India stood at $56.3 billion.
“This region has some of our largest energy suppliers and features significant Indian diaspora communities and businesses,” Misri underscored, to a question from StratNewsGlobal, adding that “An FTA with the GCC would obviously unlock tremendous economic potential in the partnership. We are keen to make progress. Obviously, that progress is a sum total of the kinds of relationships we have with individual countries in the GCC region.”
Importance of FTA
With around nine million Indian nationals residing and working across the Gulf, the region serves as a vital source of remittances—over $15 billion each year—and maintains strong ties with India.
Experts suggest that a well-structured FTA could bring about mutual gains such as lower tariffs, more efficient customs processes, and even flexible visa arrangements. It could give Indian exporters broader access to Gulf markets, while allowing GCC investors to deepen their footprint in Indian sectors like infrastructure, energy, and digital technologies.
This initiative also focuses on the Gulf bloc’s push for economic diversification. Speaking at the Kochi Dialogue earlier this year, GCC Secretary-General Jasem Mohamed Al-Budaiwi stressed the need to strengthen cooperation with India.
“Expanding free trade negotiations will pave the way for economic integration, removing trade barriers, expanding cooperation in digital economies, and transforming industries,” he noted.
Background
Although a foundational framework for India-GCC economic cooperation was signed in 2004, progress on the FTA has been slow. Earlier negotiation rounds in 2006 and 2008 lost momentum due to shifting geopolitical and economic circumstances. However, recent diplomatic signals indicate a renewed push toward finalizing the deal.
This month, lead negotiators from both sides met for talks seen as laying the groundwork for further discussions during Modi’s trip. Saudi Arabia—perhaps the most influential GCC member—is expected to play a key role in advancing the agreement.
Bilateral Investment Treaty
Saudi Arabia has linked its support for the FTA to the conclusion of a Bilateral Investment Treaty (BIT) with India. New Delhi, however, wants to treat the two as separate processes. This could delay the overall FTA timeline.
With bilateral trade already exceeding $160 bn and GCC investments in India surpassing $5.7 bn, the environment is favourable for concluding a broad-based trade deal. The FTA could pave the way for expanded collaboration in areas ranging from energy and technology to agriculture and digital services.
