India–GCC FTA Negotiations Restarted: Terms of Reference Signed to Resume Talks
On 05 February 2026, India and the Gulf Cooperation Council (GCC) formally signed the Terms of Reference (ToR) at Vanijya Bhawan, New Delhi, to re-launch negotiations for a comprehensive Free Trade Agreement (FTA).
This development marks a major diplomatic and economic breakthrough because FTA talks between India and the GCC had remained suspended since 2011, despite the region being one of India’s most strategic partners in trade, energy security, and diaspora engagement.
The renewed FTA push is expected to strengthen India’s market access in the Gulf region, reduce tariff and non-tariff barriers, attract investments, and deepen cooperation in sectors such as food processing, petrochemicals, infrastructure, ICT, and services.
Why This Development Matters for UPSC
This issue is important for UPSC because it connects multiple GS themes:
GS Paper II (International Relations)
- India’s strategic engagement with West Asia
- Diaspora diplomacy
- Bilateral and multilateral economic partnerships
GS Paper III (Economy)
- Trade balance, export promotion, and tariff negotiations
- Petrochemical and energy security
- FDI and global value chains
- Food processing and investment-led growth
What is the GCC?
The Gulf Cooperation Council (GCC) is a regional political and economic bloc formed in 1981.
It includes six member countries:
- Saudi Arabia
- United Arab Emirates (UAE)
- Qatar
- Kuwait
- Oman
- Bahrain
The GCC is collectively one of the world’s most influential energy and investment regions, and it plays a central role in global oil and gas supply chains.
What is an FTA and Why is it Important?
A Free Trade Agreement (FTA) is a treaty between two or more partners that aims to:
- Reduce or eliminate tariffs on goods
- Improve access for services
- Encourage investment
- Reduce non-tariff barriers (NTBs)
- Promote trade facilitation and standards cooperation
For India, FTAs are increasingly being used as a tool to:
- Expand exports
- Secure supply chains
- Attract investment
- Gain strategic leverage in global trade
Key Highlights of the India–GCC ToR Agreement (05 Feb 2026)
The Terms of Reference (ToR) is essentially the framework that defines:
- What the negotiations will cover
- What sectors will be prioritised
- What objectives will be pursued
- The scope and structure of the FTA
1) Sectoral Focus
The renewed FTA talks will target high-growth sectors, especially:
- Food processing
- Petrochemicals
- Infrastructure
- Information and Communication Technology (ICT)
These sectors are crucial because they connect India’s strengths (food, manpower, services) with GCC strengths (energy, capital, logistics).
2) Strategic Objectives
The agreement aims to:
- Reduce tariffs and trade barriers
- Improve market access for Indian goods and services
- Encourage GCC investment into India
- Strengthen energy security and food security
3) Signatories
The ToR was signed by:
- Ajay Bhadoo (India)
- Dr. Raja Al Marzouqi (GCC)
This signing took place in the presence of India’s Commerce Minister Piyush Goyal, indicating strong political backing.
Why Were India–GCC FTA Talks Suspended Since 2011?
The India–GCC FTA discussions began in the 2000s but stalled due to:
1) Tariff Disagreements
India wanted better market access for:
- Services
- Professionals
- IT and healthcare sectors
Whereas GCC countries sought:
-
Easier entry for petrochemicals and hydrocarbons
2) Non-Tariff Barriers
Issues included:
- Standards and certification
- Customs procedures
- Regulatory restrictions on services
3) Lack of Negotiation Momentum
The process lacked continuity and political push for many years.
Economic Context: Why GCC is Critical for India
1) Bilateral Trade: A Massive Trade Corridor
Trade between India and GCC reached approximately:
$178.56 billion in FY 2024–25
This accounts for over 15% of India’s global trade, making the GCC one of India’s largest trade partners.
This trade includes:
- Crude oil and LNG imports
- Petrochemical imports
- Indian exports of food items, textiles, machinery, pharmaceuticals, and engineering goods
2) Energy Security Link
India is heavily dependent on the Gulf for:
- Crude oil imports
- LNG imports
- Strategic petroleum supply stability
An FTA can:
- Ensure smoother energy trade
- Improve long-term energy cooperation
- Enable petrochemical joint ventures
3) Indian Diaspora: A Strategic Strength
The GCC region hosts nearly:
10 million Indian expatriates
This diaspora:
- Supports remittances
- Strengthens cultural ties
- Acts as a bridge for business and investment
4) Investment & FDI Significance
GCC countries are major investors in:
- Infrastructure
- Real estate
- Start-ups
- Renewable energy
- Logistics and ports
As per available data:
GCC cumulative investments in India crossed $31.14 billion (by Sept 2025)
A well-designed FTA can further accelerate:
- Sovereign wealth fund investments
- Joint industrial projects
- Long-term capital inflow
Why Food Processing is a Priority Sector
India is one of the world’s largest producers of:
- Rice
- Wheat
- Fruits and vegetables
- Dairy products
- Spices
- Meat and marine products
Meanwhile, GCC countries:
- Have limited agricultural capacity
- Depend heavily on food imports
- Focus on food security through diversification of import sources
How the FTA Helps
A tariff-friendly trade framework can:
- Increase India’s agri and processed food exports
- Encourage GCC investment in Indian food parks
- Promote halal-certified processed food trade
- Strengthen cold chain and logistics cooperation
This aligns strongly with India’s:
- Make in India
- PM Gati Shakti
- PLI schemes (food processing)
Why Petrochemicals are a Priority Sector
The GCC is a global leader in:
- Oil refining
- Petrochemical production
- Polymer exports
India is a large consumer market for:
- Plastics
- Chemicals
- Industrial feedstocks
- Fertilizer-related chemicals
How the FTA Helps
- Lower-cost raw material imports for Indian industry
- Joint ventures in refining and petrochemical complexes
- Better integration in global value chains
However, India will also have to ensure:
- Protection for domestic petrochemical industries
- Balanced tariff reductions
- Safeguards against dumping
How This FTA Fits into India’s Recent Trade Strategy
India has increasingly adopted a CEPA/FTA-driven trade diplomacy approach.
Examples mentioned in the current development:
- India–UAE CEPA (May 2022)
- India–Oman CEPA (December 2025)
This indicates a clear policy direction:
- Strengthen trade corridors with West Asia
- Secure energy and investment flows
- Expand India’s export footprint in high-income markets
Strategic Significance for India (GS-II Angle)
1) Strengthening India’s West Asia Policy
India’s West Asia engagement is now focused on:
- Economic integration
- Strategic stability
- Connectivity and logistics
- Counter-terrorism and maritime security
The GCC FTA complements this broader approach.
2) Supporting India’s Indo-Pacific and Maritime Trade Goals
GCC ports and logistics hubs like:
- Jebel Ali (UAE)
- Dammam (Saudi Arabia)
- Doha (Qatar)
are vital for India’s:
- Shipping routes
- Trade corridor efficiency
- Export competitiveness
3) Balancing Global Trade Pressures
As global trade becomes more fragmented due to:
- Protectionism
- Geopolitical conflicts
- Supply chain disruptions
India’s diversified trade agreements reduce over-dependence on any single market.
Challenges and Concerns in India–GCC FTA
While the FTA is promising, several challenges remain:
1) Trade Deficit Concerns
India imports large quantities of:
- Crude oil
- LNG
- Petrochemical products
This creates a structural trade deficit with the GCC.
India will need stronger export access to balance trade.
2) Services Market Access
India will likely demand:
- Easier movement for professionals
- Recognition of qualifications
- Greater access in IT, healthcare, and education services
GCC countries may be cautious due to:
- Labour nationalisation policies
- Domestic workforce priorities
3) Non-Tariff Barriers
Even if tariffs fall, trade can still be restricted by:
- Complex customs rules
- Certification requirements
- Standards-related barriers
4) Political and Regional Instability
West Asia remains vulnerable to:
- Conflicts
- Oil price shocks
- Maritime disruptions in the Strait of Hormuz
This affects trade predictability.
Way Forward
For India, the India–GCC FTA negotiations represent a strategic opportunity to:
- Secure energy and petrochemical supply chains
- Expand exports of food processing and engineering goods
- Improve services market access
- Attract long-term GCC investment
- Strengthen diaspora-linked economic ties
A successful agreement would also support India’s long-term goals of becoming a global manufacturing hub, a services export leader, and a stable, energy-secure economy.
Conclusion
The signing of the Terms of Reference (ToR) on 05 February 2026 is a significant milestone in India’s trade diplomacy with West Asia. By formally restarting negotiations for the India–GCC Free Trade Agreement, India has revived a process that remained dormant for over a decade.
If concluded effectively, this FTA could become one of India’s most impactful trade agreements, given the GCC’s importance in India’s energy security, trade volume, investment inflows, and diaspora engagement.
For UPSC aspirants, this topic offers strong answer value in GS-II and GS-III, especially in questions related to international economic relations, trade agreements, food security, and energy diplomacy.
FAQs
1. What does GCC stand for?
GCC stands for the Gulf Cooperation Council, a regional bloc of six West Asian countries.
2. Which countries are members of the GCC?
Saudi Arabia, UAE, Qatar, Kuwait, Oman, and Bahrain.
3. When were India–GCC FTA talks revived?
India and GCC revived talks on 05 February 2026 by signing the Terms of Reference (ToR).
4. When were the India–GCC FTA talks originally suspended?
The talks were suspended in 2011.
5. What is the meaning of Terms of Reference (ToR) in trade negotiations?
ToR is the formal framework that defines the scope, structure, and objectives of negotiations.
6. Which sectors are being prioritised in the India–GCC FTA talks?
Key sectors include:
- Food processing
- Petrochemicals
- Infrastructure
- ICT
7. Why is GCC important for India’s economy?
Because it is a major source of:
- Energy imports
- Trade volume
- Investment and FDI
- Employment and remittances via diaspora
8. What was India’s trade with GCC in FY 2024–25?
Approximately $178.56 billion, over 15% of India’s global trade.
9. How many Indians live in GCC countries?
Nearly 10 million Indian expatriates live in GCC nations.
10. Why is food processing important in the India–GCC FTA?
GCC depends on food imports, and India can expand exports of processed food, spices, and agricultural products.
11. Why are petrochemicals a key focus in these negotiations?
Because GCC is a global petrochemical producer and India is a major consumer market.
12. How does this topic link to UPSC GS-II?
It links to:
- India’s West Asia policy
- Strategic economic diplomacy
- Diaspora relations
13. How does this topic link to UPSC GS-III?
It links to:
- Trade agreements
- Export growth
- Energy security
- FDI and supply chains
