India and GCC Move Towards Free Trade Agreement
In a significant step towards enhancing trade relations, India and the Gulf Cooperation Council (GCC) signed the Terms of Reference (ToR) for the proposed Free Trade Agreement (FTA) on February 5, 2026. The signing ceremony took place at Vanijya Bhawan in New Delhi, with key officials from both sides present, including Union Commerce Minister Piyush Goyal and Chief Negotiator Dr. Raja Al Marzouqi from the GCC.
The ToRs are intended to outline the framework and procedures for the FTA negotiations, paving the way for closer economic collaboration between India and the GCC nations. Minister Piyush Goyal highlighted the importance of the FTA, describing it as a catalyst for global trade improvements. He expressed confidence that this agreement would promote the seamless exchange of goods and services, attract investments, and create job opportunities while enhancing food and energy security in the region.
Dr. Al Marzouqi echoed Goyal’s sentiments, noting the historic trade ties between the GCC and India. He emphasized that the ToR signing marks the official start of negotiations aimed at developing a mutually beneficial FTA, especially crucial amid current global economic uncertainties. Furthermore, Dr. Al Marzouqi engaged in discussions with Indian Commerce Secretary Rajesh Agrawal to strengthen economic partnerships and explore areas of mutual interest.
The anticipated FTA is expected to unlock extensive trade opportunities, reflecting the longstanding commercial relationship India shares with the GCC. In the fiscal year 2024-25, bilateral trade between India and the GCC reached an impressive USD 178.56 billion, which includes USD 56.87 billion in exports and USD 121.68 billion in imports, accounting for 15.42% of India’s total global trade. Notably, this trade volume has seen consistent growth over recent years, averaging an annual increase of 15.3%.
Key exports from India to the GCC include engineering goods, rice, textiles, machinery, and precious gems. Conversely, India primarily imports crude oil, liquefied natural gas (LNG), petrochemicals, and gold from the GCC nations. With a combined market size of 61.5 million people and a GDP of approximately USD 2.3 trillion, the GCC ranks ninth globally in terms of economic power. Additionally, the region has emerged as a vital source of Foreign Direct Investment (FDI) for India, with investments surpassing USD 31.14 billion by September 2025.
The GCC hosts a significant Indian community of nearly ten million individuals, a relationship fortified by the presence of numerous Indian businesses throughout the region. This strong bond between the two sides serves to further enhance trade and economic cooperation as they progress toward the FTA.
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