India and the six-member Gulf Cooperation Council on Thursday formally launched negotiations for a free trade agreement (FTA) by signing the terms of reference (ToR), marking a key step towards deepening economic ties amid growing global uncertainty and rising trade risks.
The first round of negotiations for the pact, which has been under discussion for nearly two decades, is expected to take place in Riyadh in coming months, with Saudi Arabia offering to host the talks.
The development comes at a time when India has accelerated its trade diplomacy, signing a series of big-ticket agreements with major economies. Over the past few months, New Delhi has concluded FTAs with the UK, Oman, and the European Union, while also announcing the conclusion of trade deals with New Zealand and the US.
In total, India has signed or announced nine FTAs after the National Democratic Alliance government came to power in 2014.
New opportunities
The agreement would open up new opportunities for Indian goods and services, micro, small and medium enterprises (MSMEs), entrepreneurs, and skilled professionals, while also attracting large-scale investments from the Gulf region, said Union commerce and industry minister Piyush Goyal.
“India’s ties with the six GCC countries—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—have evolved into a strategic partnership with expanding economic and geopolitical dimensions,” he said.
Goyal said together with existing trade arrangements with the UAE and Oman, the proposed FTA with the GCC would help unlock the full potential of a mutually beneficial economic relationship. The proposed FTA is expected to deliver significant gains for sectors such as food processing, infrastructure, petrochemicals, and information and communications technology once the agreement is concluded.
Emphasizing India’s broader trade strategy, the minister said New Delhi was deepening its engagement with developed economies through a series of trade agreements aimed at bringing predictability, stability, and greater market access for Indian exporters, while supporting job creation and economic modernization.
From the Gulf side, Raja Al Marzouqui, chief negotiator for the India–GCC FTA, described the launch of talks as a strong signal to the global economy at a time when globalization is under pressure from uncertainty and rising risks.
“It’s a message for the whole world. It’s a message to be more cooperative. We will contribute to the stability of the global economy,” he said.
India-GCC trade
India’s trade with the GCC has remained substantial over the past four years. In 2021-22, India’s total trade with GCC countries stood at about $155 billion, with imports of $110.7 billion and exports of $43.9 billion, reflecting India’s heavy dependence on the region for energy and other raw materials.
Trade expanded sharply in 2022–23, rising to nearly $185 billion, driven mainly by higher imports from Saudi Arabia and the UAE amid elevated global energy prices. Imports climbed to $133.2 billion that year, while exports rose more modestly to $51.3 billion.
Although total trade moderated in 2023-24 to around $162 billion as commodity prices softened, India’s exports to the region strengthened to $56.3 billion.
In 2024-25, total India-GCC trade rebounded to about $179 billion, with imports increasing to $121.7 billion and exports holding steady at nearly $56.9 billion. The UAE remained India’s largest trading partner in the bloc, with bilateral trade crossing $100 billion in 2024-25, followed by Saudi Arabia at about $42 billion. Oman, Kuwait, Qatar, and Bahrain together accounted for a smaller but stable share of trade, with Oman showing a recovery after a dip in 2023-24.
“The signing of the ToR between India and the GCC promises substantial mutual gains; expanded market access for Indian exports, plus Gulf investments in infrastructure and tech, boosting jobs and supply chain resilience,” said Anant Swarup, senior advisor, EY India.
“With 9 million Indians already working in the region and contributing to its growth, the proposed FTA will further boost economic integration between the partners. Today’s development highlights India’s proactive global integration, connecting India to nearly all major consuming markets as an open economy,” he added.