Why is a potential trade deal with 6 Arab nations significant to India?

First, it was the European Union, then the United States, and now the Gulf Cooperation Council (GCC). India is flexing its trade muscle as it resumed talks on a free trade agreement on Thursday (February 5) with the six Arab nations.

On Thursday, Union Commerce Minister Piyush Goyal announced that India has signed the Terms of Reference (ToR) for a potential FTA with the six-nation bloc, with the aim of strengthening trade and investment between the two.

This is a significant move that comes at a time when India is accelerating its trade ties across the globe. Recently, it concluded negotiations with the EU and sealed the ‘mother of all trade deals’ and then followed it up with the ‘father of all trade deals’ with the US.

With India set to resume FTA talks with the GCC, here’s a better understanding of the six-nation collective and why it matters to New Delhi.

India looks to flex its trade muscle with GCC

On Thursday,
India and the six-member GCC formally launched negotiations for an FTA by signing the terms of reference (ToR). Additional Secretary in the Department of Commerce, Ajay Bhadoo, and Secretariat General of the Gulf Cooperation Council, Raja Al Marzouqi, inked the ToR at a ceremony in New Delhi in the presence of Commerce Minister Piyush Goyal.

India’s decision to resume talks with the GCC comes after negotiations had first been launched in 2004, followed by talks in 2006 and 2008. However, discussions were suspended in 2011 after the GCC paused trade negotiations globally. It was in 2022 that India and the GCC announced the resumption of negotiations on an FTA. In the following year, the GCC shared a revised draft of the terms of reference following which the two sides have been talking, resulting in Thursday’s signing.

“With India deepening its trade engagements with the developed world, the stage is set for unlocking the full potential of a mutually-beneficial economic relationship with the GCC,” Goyal said at the event.

Following the signing ceremony, the first round of negotiations for the trade deal is expected to take place in Riyadh in the coming months, with Saudi Arabia offering to hold the talks. For India, Bhadoo will be the chief negotiator, while Marzouqi will represent the GCC.

The GCC explained

But, what exactly is the GCC? Described as a forum for cooperation and consultation in the Arabian peninsula, the GCC is a six-member bloc comprising Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman. It was established on May 25, 1981.

Article 4 of the GCC charter is perhaps the most important for the bloc; it states that the alliance was formed to strengthen relations among its member countries and to promote cooperation among the countries’ citizens.

The objectives of the GCC are to coordinate, integrate, and interconnect among member states in all fields in order to achieve unity among them. Additionally, to stimulate scientific and technological progress in the fields of industry, mining, agriculture, water, and animal resources, to establish scientific research, to establish joint ventures, and encourage co-operation by the private sector for the good of their people.

Why GCC matters to India

An FTA with the
GCC will strengthen not only trading ties but also further cement relations with the countries within the GCC. As Goyal stated at the ceremony on Thursday, a deal will aid trade and investments between the two. “The two trading partners have been trading amongst each other for over 5,000 years.”

Goyal further added, “It is most appropriate that we now enter into a much stronger and robust trading arrangement which will enable a greater free flow of goods, services, bring predictability and stability to policy, and help encourage a greater degree of investments.”

The commerce minister also said that a trade deal with the GCC would be highly beneficial to sectors such as food processing, infrastructure, petrochemicals, and information and communications technology.

Food processing, infrastructure, petrochemicals, and Information and Communications Technology are some of the many sectors that will benefit hugely from the India-Gulf Cooperation Council (GCC) FTA. pic.twitter.com/jr0IOKt5No

— Piyush Goyal (@PiyushGoyal) February 5, 2026

India would also get to grow Indian infrastructure and the infrastructure in the GCC, noted Goyal. An FTA would also benefit the food and energy security of the GCC nations, as well as India.

For India, the GCC truly matters. Firstly, around 10 million Indians live and work in the GCC countries.

Moreover, India and the six-member bloc already have robust trade ties. From 2021 onwards, trade between the two has been increasing. In 2021-2022, trade between India and the GCC was about $155 billion, with imports of $110.7 billion and exports of $43.9 billion. The following year, the value rose to nearly $185 billion, of which imports were $133.2 billion, and exports were $51.3 billion. In 2023-2024, the number again rose, though moderately, to $162 billion. And last year, total India-GCC trade was $179 billion, with imports at $121.7 billion and exports at $56.9 billion.

Among the GCC, the
UAE remains India’s biggest trading partner, followed by Saudi Arabia, Oman, Kuwait, Qatar, and Bahrain. Moreover, the GCC also dominates India’s inward remittances. The UAE is, in fact, one of the largest contributors to India’s inward remittances, only after the United States.

Notably, India already has trade deals with members of the GCC. It implemented a free trade pact with the UAE in May 2022 and signed a
Comprehensive Economic Partnership Agreement (CEPA) with Oman in December 2025.

Timing really matters

The timing of the resumption of trade talks with the GCC is significant. It comes just months after
Saudi Arabia and Pakistan inked a defence pact. Moreover, many suggest that the trade deal may be India’s way to veer the members of the GCC further away from Pakistan.

Also, the trade negotiations come a week after
India and the EU sealed a trade agreement, dubbed the ‘mother of all deals’. This agreement remove trade barriers and opens up new export opportunities, creating the world’s largest free trade zone, encompassing two billion people and nearly 25 per cent of global gross domestic product.

But that’s not all. On Monday, US President Donald Trump announced that
India and America had agreed on a trade deal, resulting in US tariffs on Indian goods being slashed to 18 per cent. Commerce Minister Piyush Goyal on Thursday said that while a joint statement will be declared in four-five days, the two nations are also expected to ink the deal in March.

All in all, it seems that India’s trading ties are only improving.

With inputs from agencies