India GCC Economic and Strategic Links | 19 May 2025

India's engagement with the Gulf Cooperation Council (GCC) has evolved into a cornerstone of its West Asia strategy, driven by deep-rooted energy ties, expanding trade agreements, and strategic investments. As India's energy demands grow, the GCC's vast reserves provide a crucial lifeline, while trade agreements with UAE and Oman signify stronger economic bonds. Additionally, remittances from the large Indian diaspora in the Gulf bolster India's economy, highlighting the socio-economic interdependence. Strengthening these ties is not just strategic but essential for India's energy security and economic resilience. 

What is the Significance of India-GCC Relations? 

• Major Energy Security Partner: GCC countries meet over 60% of India’s crude oil and 70% of natural gas import needs. 
  • This energy partnership is critical for India's growing economy, which depends on reliable hydrocarbon supply lines. 
• Top Trade Bloc for India: India’s bilateral trade with GCC exceeded USD 161 billion in FY 2023–24, led by UAE and Saudi Arabia. 
  • This accounts for a significant share of India’s global trade, showing GCC’s centrality in India’s export-import network. 
• Massive Diaspora Engagement: Nearly 9 million Indians live across GCC states, contributing to remittances worth over USD 50 billion annually. 
  • The diaspora serves as a vital bridge in diplomacy, labor, services, and retail sector influence within GCC. 
• Cultural and People-to-People Ties: Indian expatriates form the largest communities in GCC states like UAE, Oman, and Saudi Arabia. 
  • These long-standing bonds foster cultural familiarity, religious harmony, and bilateral trust in regional dynamics. 
  • Cultural festivals, Shreenathji temple(Bahrain), BAPS Mandir- the first traditional Hindu temple in the UAE and 7,500 Indian-owned companies enrich the bilateral ecosystem. 
• Maritime and Strategic Geography: The Arabian Sea and Strait of Hormuz connect Indian and Gulf ports via major shipping lanes. 
  • This makes GCC an indispensable partner for India’s Indo-Pacific maritime vision and energy transport corridors. 
  • Also, ports like the Port of Duqm in Oman hold significant strategic importance for India, especially in terms of its maritime presence and cooperation. 
• Joint Defense Cooperation: India conducts regular defense drills with GCC members, including naval exercises like Al Mohed Al Hindi with Saudi Arabia. 
  • Such collaboration enhances maritime security and counters threats like piracy and terrorism in shared waters. 
• Investment Opportunities and Capital Flow: GCC sovereign wealth funds are increasingly investing in Indian infrastructure, tech startups, and renewable energy sectors. 
  • Saudi Arabia’s Public Investment Fund and UAE’s Abu Dhabi Investment Authority (ADIA) have collectively committed over USD 30 billion. 
  • Qatar supplies over 48% of India’s LNG needs and co-chairs bilateral maritime drills like Za’ir-Al-Bahr. 
    • Its sovereign fund plans USD 10 billion investment in Indian infrastructure, AI, and renewables by 2030. 
  • India is the 6th largest investor in Bahrain, focusing on fintech, real estate, health, and education sectors. 
• Digital and Financial Integration: India’s UPI and RuPay card systems are being integrated with UAE and Oman’s digital payment platforms. 
  • This fosters seamless financial interaction, supporting tourism, retail, and business transactions for both sides. 
• Vision 2030 and India's Strengths: Saudi and UAE’s diversification strategies align with India’s Digital India, Startup India, and Green Hydrogen Missions. 
  • India's IT and solar technology capabilities complement Gulf efforts to modernize and decarbonize their economies. 
• Connectivity Projects and IMEC: India is a key stakeholder in the India-Middle East-Europe Economic Corridor (IMEC), linking the Gulf with Europe. 
  • This project counters China’s BRI and creates resilient supply chains benefiting both GCC and Indo-Pacific. 
• FTA and CEPA Prospects: India and GCC are negotiating a Free Trade Agreement (FTA) to boost goods, services, and e-commerce. 
  • A Comprehensive Economic Partnership Agreement (CEPA) already exists with the UAE, offering a roadmap for comprehensive trade pacts with other GCC states. 
• Balancing Geopolitical Equations: India’s GCC ties help balance regional tensions involving Iran, Israel, and Pakistan while preserving neutrality. 
  • This diplomatic flexibility enhances India’s stature as a constructive player in West Asian and Indo-Pacific affairs. 
• Saudi Arabia's Strategic Council Framework: India-Saudi ties have evolved through the Strategic Partnership Council (SPC) co-chaired by leaders of both nations. 
  • The SPC includes defense, energy, digital technology, and culture under its four institutionalized ministerial committees. 
• UAE’s Role in Bilateral Modernization: The UAE supports India’s infrastructure push through investments in ports, renewables, logistics, and digital finance. 
  • It also backs CEPA implementation, Abu Dhabi Investment Authority (ADIA) operations in GIFT City, and financial system linkages like UPI-AANI. 
• Oman as Defense and Maritime Ally: Oman remains India’s oldest strategic partner and only Gulf country for tri-service defense cooperation. 
  • Over 6000 Indo-Omani joint ventures and the Oman-India Investment Fund mark its economic depth. 
• Joint Action Plan for Regional Stability: The 2024–2028 India-GCC Joint Action Plan institutionalized cooperation in health, energy, security, and education. 
  • It reflects the shared goal of peace, prosperity, and progress in the Indo-Pacific and extended neighborhood. 

What are the Challenges Associated with India-GCC Relations? 

• Delayed Free Trade Agreement: FTA negotiations between India and GCC have remained inconclusive despite multiple bilateral engagements since 2004. 
  • Bureaucratic hurdles, tariff disputes, and divergent economic priorities have slowed the finalization of this vital agreement. 
• Labor Rights and Welfare Concerns: Reports indicate persistent issues like unpaid wages, poor living conditions, and restricted mobility for Indian workers. 
  • The Kafala system still limits worker autonomy in countries like Saudi Arabia and Bahrain, raising human rights questions. 
• Overdependence on Energy Imports: India imports over USD 100 billion worth of fossil fuels from GCC, creating a lopsided trade balance. 
  • Rising global oil prices and supply shocks increase India’s vulnerability and widen its bilateral trade deficit. 
• Growing Trade Imbalance: India’s exports to GCC remain much lower than imports, especially with Saudi Arabia and Qatar. 
  • This persistent deficit undermines economic symmetry and impacts India’s bargaining power in trade negotiations. 
• Geopolitical Instability in the Region:Conflicts like the Yemen war, Israel-Palestine tensions, and Saudi-Iran rivalry affect regional peace and cooperation. 
  • Such instability complicates India’s diplomatic balancing act, especially given its ties with Iran and Israel. 
• Intra-GCC Frictions: Tensions like the Qatar blockade in 2017 exposed fault lines within the GCC framework itself. 
  • These internal differences reduce the bloc’s effectiveness as a collective partner for external players like India. 
• Emerging Gulf-China-Pakistan Axis: Saudi Arabia’s closer ties with China and Pakistan present strategic challenges for India’s Gulf outreach. 
  • This shift may dilute India’s influence, especially in defense, digital, and regional security cooperation frameworks. 
• GCC’s Economic Localisation Drive: Policies like Saudization and Emiratisation prioritize local hiring, reducing job opportunities for Indians. 
  • This could impact Indian remittances and lead to return migration, straining India’s domestic employment systems. 
• Limited R&D and Innovation Cooperation:Technology collaboration remains limited due to weak IP regimes and nascent innovation ecosystems in Gulf states. 
  • India seeks deeper tech transfer, but mutual gaps in research capabilities remain a bottleneck. 
• Environmental Vulnerabilities: Climate change in GCC, including rising temperatures and water scarcity, affects Indian laborers’ living conditions. 
  • Sustainable infrastructure collaboration is crucial to address shared environmental stressors across the region. 

What Should Be the Way Forward for Strengthening India-GCC Relations? 

• Finalize GCC-India FTA at the Earliest: A fast-tracked FTA will unleash trade potential in services, digital platforms, and energy investments. 
  • It will address tariff asymmetries and institutionalize a rules-based economic partnership benefitting both economies. 
• Encourage Two-Way Investments: India must push for sovereign fund commitments into GIFT City and strategic infrastructure projects. 
  • Similarly, the Indian private sector should invest more in Gulf tourism, health, and logistics. 
• Build Strategic Dialogue Mechanisms: Establishing a permanent India-GCC Summit will allow structured review of cooperation in defense, diaspora, and technology. 
  • Regular high-level meetings ensure policy continuity, accountability, and future-ready planning for emerging challenges. 
• Enhance Diaspora Safety and Integration: India must push for comprehensive labor agreements with better grievance redressal and legal protection systems. 
  • Strengthening skill certification and social security portability can protect workers’ rights across GCC nations. 
• Deepen Green Energy Partnerships:India’s leadership in solar and hydrogen can complement GCC’s Vision 2030 clean energy goals. 
  • Joint ventures under the International Solar Alliance can scale transnational renewable energy hubs. 
• Expand Digital and AI Cooperation: Set up GCC-India AI and FinTech Innovation Labs in Bengaluru, Dubai, or Riyadh. 
  • These will boost R&D, cybersecurity frameworks, and financial innovation across Asia and the Middle East. 
• Strengthen Defense and Maritime Engagements: India should expand defense drills with GCC navies and improve port-to-port logistics frameworks. 
  • This will enhance maritime domain awareness and counterterrorism capacity in the Western Indian Ocean. 
• Leveraging GCC for Counterterrorism: India can use GCC cooperation to counter terrorism financing and isolate Pakistan’s anti-India narratives regionally. 
  • Joint intelligence sharing and extradition agreements with GCC  can help in disrupting terror networks. 
• Create a Gulf-India Climate Taskforce: India can offer low-cost solutions for water scarcity, waste management, and climate resilience infrastructure. 
  • Joint research centers can study sustainable desert urbanization and renewable desalination models. 
• Utilize GCC for Indo-West Asia Strategy: GCC forums can help India balance Iran-Israel tensions while advocating multilateralism in West Asia. 
  • Coordinated diplomacy through GCC also boosts India’s presence in the Red Sea and Hormuz corridors. 
• Promote Cultural and Educational Ties: Establish new Indian Council for Cultural Relations chairs, Hindi departments, and India Studies Centers across Gulf universities. 
  • People-to-people diplomacy can mitigate cultural stereotyping and strengthen regional goodwill. 

Conclusion 

India-GCC relations are pivotal for regional stability, energy security, and economic growth. Strengthening trade agreements, energy cooperation, and protection for Indian expatriates can deepen this partnership. As the Gulf diversifies beyond oil, India stands to benefit from strategic investments, making this relationship crucial for mutual prosperity and regional security.