India and Gulf Cooperation Council | 25 Nov 2022

For Prelims: Types of Trade Agreements, India & Gulf Countries

For Mains: Significance of Indian-Gulf Relations, Opportunities for India under the Free Trade Agreement (FTA)

Why in News?

India and the Gulf Cooperation Council (GCC) have agreed to pursue a Free Trade Agreement (FTA) between the two regions and resume the negotiations.

  • GCC is a union of six countries in the Gulf region — Saudi Arabia, the UAE, Qatar, Kuwait, Oman and Bahrain. The council is the largest trading bloc of India.

Why is the Gulf Region Crucial for India?

  • India has enjoyed centuries of good relations with countries like Iran, while smaller gas-rich nation Qatar is one of India’s closest allies in the region.
  • India shares good relations with most of the countries in the Gulf.
  • The two most important reasons for the relationship are oil and gas, and trade.
    • Qatar accounts for 41% of India’s total natural gas imports.
  • Two additional reasons are the huge number of Indians who work in the Gulf countries, and the remittance they send back home.
    • As per a research paper published by the Reserve Bank of India, in the financial year 2020-21, remittances from the UAE to India were USD15.40 billion, which is 18% of India’s total inward remittances.

What is the State of the India-GCC Trade Relationship?

  • India’s exports to the GCC member countries grew by 58.26% to about USD 44 billion in 2021-22 against USD 27.8 billion in 2020-21.
  • Bilateral trade in goods has increased to USD 154.73 billion in 2021-22 from USD 87.4 billion in 2020-21.
  • Services trade between the two regions was valued at around USD 14 billion in 2021-22, with exports aggregated at USD 5.5 billion and imports at USD 8.3 billion.
  • GCC countries contribute almost 35% of India’s oil imports and 70% of its gas imports.
  • India’s overall crude oil imports from the GCC in 2021-22 were about USD 48 billion, while LNG and LPG imports in 2021-22 stood at about USD 21 billion.

What is the Status of Indian Trade Agreements with Other Countries?

  • India-Australia Trade Agreement:
    • Recently, the Australian Parliament approved the India-Australia Economic Cooperation and Trade Agreement (Ind-Aus ECTA).
    • It is the first Free Trade Agreement (FTA) that India has signed with a major developed country in over a decade.
    • The Agreement encompasses cooperation across the entire gamut of bilateral economic and commercial relations between the two friendly countries.
  • India-European Union FTA:
    • India and the EU restarted their FTA negotiations in goods and services in early 2021 after a gap of eight years.
    • The two regions aim to work out pacts in investments and geographic indications parallel to FTA engagement.
    • Round three of India-EU FTA talks will begin later this year at Delhi.
  • India-UK FTA:
    • Over the next few months, India and the United Kingdom will start talks on a free trade agreement (FTA).
    • On the agenda is securing a patent regime against evergreening by pharma companies, seeking easier work visas as well as access to Indian movies in the region under the proposed FTA.
  • India-UAE CEPA
    • The Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates (UAE) came into force from 1st May, 2022
    • CEPA provides for an institutional mechanism to encourage and improve trade between the two countries.
  • India-Canada CEPA:
    • Canada had previously been working to advance negotiations on a Foreign Investment Promotion Protection Agreement (FIPA) and a CEPA.
    • In August 2022, India and Canada confirmed that they would hold the fourth round of negotiations to secure an Early Progress Trade Agreement (EPTA), an intermediate step till a Comprehensive Economic Partnership Agreement (CEPA) is reached.

Way Forward

  • The Gulf region has historical, political, economic, strategic and cultural significance for India. India-GCC Free Trade Agreement (FTA) can provide a boost to the relations.
  • Presently, the GCC region is volatile, thus, India needs to safeguard its large economic, political and demographic stakes in the region.

UPSC Civil Services Examination, Previous Year Question (PYQ)

Q. Which of the following is not a member of ‘Gulf Cooperation Council’? (2016)

(a) Iran
(c) Oman 
(b) Saudi Arabia
(d) Kuwait

Ans: (a)


  • The Gulf Cooperation Council (GCC) is an alliance of 6 countries in the Arabian Peninsula – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. Iran is not a member of the GCC.
  • It was established in 1981 to promote economic, security, cultural and social cooperation between the members and holds a summit every year to discuss cooperation and regional affairs.
  • Hence, option (a) is the correct answer.

Source: TH