Context

In a major step towards deepening economic engagement, India and the six-nation Gulf Cooperation Council (GCC) signed the Terms of Reference (ToR) for negotiations on a Free Trade Agreement (FTA) on 5 February 2026. The ToR serves as a formal precursor to the commencement of FTA negotiations, outlining the scope, objectives, and modalities of discussions between the two sides.

The GCC countries, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE collectively constitute India’s largest merchandise trading partners, surpassing trade volumes with both the European Union and the United States.

Bilateral Benefits

• Trade and Investment: A potential FTA is expected to remove or reduce tariffs and non-tariff barriers, facilitating a smoother and larger flow of goods and services.
• Energy Diversification: The GCC’s vast energy resources could support India’s energy security and diversification objectives.
• Employment Opportunities: India’s workforce, both within GCC nations and domestically, could benefit from increased trade, services, and investment flows.
• Investment Influx: Existing investments from GCC countries are likely to expand under the FTA framework, boosting infrastructure, industrial growth, and the services sector in India.

About Free Trade Agreements (FTAs)

FTAs are agreements between countries aimed at reducing or eliminating trade barriers such as tariffs and quotas, thereby creating preferential trade areas. Modern FTAs often extend beyond goods and services to include investment, intellectual property rights, and digital trade. While FTAs enhance market access and lower consumer costs, they may also pose challenges such as job displacement and environmental concerns.

About the GCC

• Members: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates
• Established: 25 May 1981, Riyadh, Saudi Arabia
• Objectives: Economic, social, and security coordination; trade and customs integration; and promotion of technological progress
• Significance: The GCC is a major economic bloc with substantial oil and gas reserves and a large expatriate population, particularly from India
• Role in Regional Stability: The GCC plays a critical role in ensuring stability in the Middle East, fostering economic growth, and facilitating global investment flows

Conclusion

The signing of the Terms of Reference underscores India’s commitment to strengthening economic ties with the Middle East. If successfully negotiated, the India–GCC FTA could emerge as a landmark agreement, significantly expanding trade, investment, and employment opportunities while reinforcing India’s strategic and economic partnership with a geopolitically important region.