India and Gulf Cooperation Council sign terms of reference to begin free trade agreement discussions

India and the Gulf Cooperation Council (GCC) have agreed on the terms to begin negotiations on a free trade agreement, ANI quoted Union Commerce Minister Piyush Goyal as saying.

Goyal made the remarks during the Terms of Reference (ToR) signing ceremony between India and the GCC. On Thursday, 5 February, India and the GCC signed the terms of reference to begin FTA talks. The ceremony was presided over by Commerce Minister Piyush Goyal.

The terms of reference (ToR) will describe the scope and modalities of a proposed trade deal.

The GCC consists of six Arab states: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).

FTA to boost bilateral trade, says Goyal

Goyal said that the deal will help boost bilateral trade and investments. The trade pact with the GCC would help diversify India's energy sources, he said, according to Reuters.

He also noted that nearly 10 million Indians live and work in the GCC region.

The FTA talks with the GCC would mark a resumption of negotiations, as the previous two rounds took place in 2006 and 2008 between the two regions. GCC postponed its negotiations with all countries and economic groups, so the third round did not take place, PTI reported.

What does the trade basket reveal?

India primarily imports crude oil and natural gas from Gulf countries such as Saudi Arabia and Qatar. In return, it exports pearls, precious and semi-precious stones, metals, imitation jewellery, electrical machinery, iron and steel, and chemicals to these nations, the report said.

India's exports to the GCC grew by about 1% to $57 billion in 2024-25, up from $56.32 billion in 2023-24. Imports rose by 15.33% to $121.7 billion in 2024-25 from $105.5 billion in 2023-24.

Bilateral trade has risen to $178.7 billion in 2024-25 from $161.82 billion in 2023-24.

In the last fiscal year, the UAE ranked as India's third-largest trading partner. Indian exports to the UAE amounted to $36.63 billion, while imports reached $63.40 billion, resulting in a trade deficit of $26.76 billion for 2024-25.

Saudi Arabia was India's fifth-largest trading partner during the last fiscal year. Exports to the kingdom amounted to $11.75 billion, while imports reached $30.12 billion, resulting in a trade deficit of $18.36 billion in 2024-25.

Qatar ranked as India's 22nd-largest trading partner in the last fiscal year. Exports stood at $1.68 billion, while imports totalled $12.46 billion, resulting in a trade deficit of $10.78 billion in 2024-25. India primarily imports liquefied natural gas (LNG) from Qatar and exports cereals, meat, fish, chemicals, and plastics.

Oman remained India's 28th-largest trading partner in 2024-25. Exports totalled $4 billion, and imports totalled $6.54 billion. The trade deficit was $2.48 billion.

Kuwait stood 29th among India's trading partners in 2024-25. Exports were $1.93 billion, and imports totalled $8.28 billion, resulting in a trade deficit of $6.35 billion.

Meanwhile, India's exports to Bahrain, its 65th-largest trading partner, totalled $797.47 million in the last financial year. Imports were 843.44 million, leaving a trade deficit of $45.97 million in 2024-25.