Why in news?
India and the Gulf Cooperation Council (GCC) have signed a Terms of Reference document to negotiate a comprehensive Free Trade Agreement. The understanding, reached on 5 February 2026, signals the restart of formal talks that had stalled for years. Commerce Minister Piyush Goyal said the FTA will open a new trade corridor, diversify India’s energy sources and expand opportunities in sectors such as food processing, infrastructure, petrochemicals and information technology.
Background
The GCC is a regional intergovernmental organisation founded in 1981 by six West Asian countries—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. It aims to coordinate economic, social and political policies among its members. India has longstanding cultural and economic ties with the Gulf; about 10 million Indians live and work in GCC countries, sending billions of dollars in remittances.
Earlier attempts to negotiate an India–GCC FTA began in the mid‑2000s but were delayed by global economic crises and divergent expectations. The new Terms of Reference define the scope, negotiating structure and timelines for the agreement, providing impetus to resume discussions.
Key aspects of the proposed FTA
- Trade potential: Two‑way trade between India and the GCC currently stands at around US$170 billion. The FTA is expected to reduce or eliminate tariffs on a wide range of goods and services.
- Energy security: A structured agreement could secure long‑term supplies of crude oil and natural gas to India while encouraging investment in renewable energy projects.
- Benefiting key sectors: Indian industries such as food processing, infrastructure development, petrochemicals and information and communication technology stand to gain greater market access in the Gulf.
- People‑to‑people links: The agreement could ease mobility for professionals and workers, improve visa facilitation and protect the rights of migrant labourers.
Significance
- Strengthening ties: An FTA would deepen India’s strategic partnership with the Gulf region, complementing existing security and cultural cooperation.
- Diversifying trade: By expanding beyond hydrocarbons, the agreement can spur investments and technology transfers in new sectors.
- Supporting diaspora: Clear rules on employment and social security will benefit millions of Indians working in Gulf countries.
Conclusion
The signing of the Terms of Reference revives momentum towards an India–GCC free trade pact. Successful negotiations could unlock significant economic benefits and bring the two regions closer, underscoring India’s role as a trusted partner in West Asia.
Sources: News On Air
