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

India and the Gulf Cooperation Council (GCC) have signed the Terms of Reference (ToR) for a Free Trade Agreement (FTA), marking a pivotal step in enhancing economic relations. This development is crucial for UPSC aspirants, particularly for GS Paper 2 (International Relations) and GS Paper 3 (Economy). Last Updated: 2026-02-06

Key Facts About India–GCC Free Trade Agreement

• India and GCC signed the Terms of Reference for a Free Trade Agreement.
• The ToR guides negotiations for a comprehensive FTA.
• Aims to strengthen economic ties and strategic partnerships.
• Facilitates the flow of goods and services and attracts investments.
• India's trade with GCC reached USD 178.56 billion in FY 2024-25.
• Exports to GCC valued at USD 56.87 billion.
• Imports from GCC amounted to USD 121.68 billion.
• Trade has grown at an average rate of 15.3% over the last five years.
• Key exports include engineering goods, rice, textiles, and jewelry.
• Major imports comprise crude oil, LNG, petrochemicals, and gold.
• GCC is a significant source of Foreign Direct Investment for India.
• Cumulative FDI from GCC reached USD 31.14 billion by September 2025.
• GCC hosts nearly 10 million Indians, strengthening cultural ties.
• The bloc consists of six Arab states: Saudi Arabia, UAE, Bahrain, Qatar, Kuwait, and Oman.
• GCC represents a market of approximately 61.5 million people.
• Signing occurred on February 5, 2026, in New Delhi.

India's Strategic Economic Partnerships

The India–GCC Free Trade Agreement is a strategic move to bolster India's economic footprint in the Middle East. This agreement aligns with India's broader economic goals of enhancing trade relations, securing energy resources, and expanding its global market presence. With the GCC being a significant trading partner, this FTA is expected to propel India's trade growth, contributing to its GDP and employment rates. The agreement also positions India favorably in international rankings concerning trade partnerships and economic collaborations.

Related Government Schemes/Policies

• Make in India: Aims to encourage companies to manufacture in India and incentivize dedicated investments into manufacturing.
• Atmanirbhar Bharat: Focuses on making India self-reliant by boosting local manufacturing and reducing dependency on imports.
• National Trade Policy: Seeks to enhance India's trade competitiveness and integrate with global supply chains.

UPSC Relevance

GS Paper 2: International Relations - India and its neighborhood relations, bilateral agreements.

GS Paper 3: Economy - Effects of liberalization on the economy, changes in industrial policy, and their effects on industrial growth.

Prelims Angle: Questions could focus on the composition of GCC, trade figures, and key exports/imports.

Mains Angle: Analytical themes could include the impact of FTAs on India's economy, strategic importance of GCC, and energy security.

FAQ Section

• What is the India–GCC Free Trade Agreement?
  The India–GCC Free Trade Agreement is a proposed trade pact aimed at enhancing economic relations between India and the Gulf Cooperation Council by facilitating trade and investment flows.
• Why is the India–GCC FTA important?
  This FTA is crucial for boosting trade, securing energy resources, and creating jobs. It also strengthens India's strategic and economic ties with the GCC, a key trading partner.
• What are the key features of the India–GCC FTA?
  The agreement focuses on reducing trade barriers, enhancing market access, and fostering investment opportunities. It also aims to ensure food and energy security while supporting economic growth.