India and Gulf Cooperation Council Sign Terms of Reference for Free Trade Agreement

On February 5, 2026, India and the Gulf Cooperation Council (GCC) signed the Terms of Reference (ToR) for a Free Trade Agreement (FTA), marking a significant step in revitalizing trade relations that have been in discussion since 2004. The GCC comprises six member states: Saudi Arabia, the United Arab Emirates (UAE), Qatar, Kuwait, Oman, and Bahrain. The signing ceremony took place in New Delhi, attended by India's Commerce and Industry Minister Piyush Goyal and other officials, including Ajay Bhadoo, India's chief negotiator for the FTA, and Dr. Raja Al Marzouqi, the GCC's chief negotiator.

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Negotiations for an FTA between India and the GCC began with a framework agreement in 2004, followed by two rounds of talks in 2006 and 2008. However, discussions stalled in 2011 when the GCC paused negotiations globally. The recent signing of the ToR signifies the resumption of these talks, which aim to enhance economic cooperation and trade flows between India and the GCC nations. In the fiscal year 2024-25, bilateral trade between India and the GCC reached approximately $178.56 billion, with India's exports at $56.87 billion and imports at $121.68 billion, resulting in a trade deficit of $64.81 billion.

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The FTA is expected to serve as a "force multiplier for global good," according to Minister Goyal. It aims to facilitate a seamless flow of goods and services, enhance investments, and bolster food and energy security. The agreement is particularly significant for India, which relies heavily on the GCC for crude oil and natural gas imports. The GCC is also a major source of foreign direct investment (FDI) for India, with cumulative investments exceeding $31.14 billion as of September 2025.

India sets sail to add more trade muscle as it signs FTA terms with Gulf Cooperation Council

The sectors anticipated to benefit from the FTA include food processing, infrastructure, petrochemicals, and Information and Communications Technology (ICT). Goyal emphasized that the agreement would create job opportunities and encourage greater investments, thereby enhancing the economic ties between India and the GCC. The GCC countries have historically been significant contributors to India's inward remittances, further reinforcing the economic relationship.

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Despite the optimism surrounding the FTA, challenges remain. India's trade deficit with the GCC, primarily driven by energy imports, poses a concern. The need to balance this deficit while enhancing exports in sectors beyond traditional strengths, such as gems and jewelry, will require targeted strategies. Additionally, the GCC's ongoing efforts to diversify its economy may present both opportunities and competitive challenges for Indian businesses.

India, GCC Launch FTA Talks: Energy Security Dominates Trade Dialogue

The signing of the Terms of Reference is a crucial milestone in India's trade diplomacy, aiming to solidify its economic engagement with the GCC. As negotiations progress, the FTA holds the potential to reshape trade dynamics, enhance energy security, and foster deeper economic ties between India and the Gulf nations. The success of this agreement will depend on addressing existing trade imbalances and leveraging new opportunities in a rapidly evolving global economic landscape.

India, GCC Launch FTA Talks: Energy Security Dominates Trade Dialogue