Trade between the Indian subcontinent and the Middle East has been throughout history. Even today, nearly two-thirds of India’s total oil imports come from the Middle East, which is essential to India’s economy. No wonder India and the GCC nations are heading toward a Free Trade Agreement (FTA).
What is India-GCC Free Trade Agreement?
The Gulf Cooperation Council (GCC) is a union of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. Established on 25 May 1981, GCC is a regional, intergovernmental, political, and economic union whose main headquarters is in Riyadh, Saudi Arabia. On 25 August 2004, the Republic of India and the Gulf Cooperation Council inked a Framework Agreement on Economic Cooperation. This agreement stipulates that both parties shall look into ways to expand and liberalize trade relations.
For now, the agreement between UAE and India has already been implemented. With this agreement, India aims to boost its financial relationships to enter a new trade era. According to Indian prime minister Mr. Modi, they anticipate the trade to rise from $60 billion to $100 billion over the next five years. In a virtual conference, he also thanked Sheikh Mohamed bin Zayed Al Nahyan, the Crown Prince of Abu Dhabi. Meanwhile, UAE understands and appreciates the vast potential of India for investors, paving the way for a great deal.
Goals and Objectives
Like every trade agreement, the India-GCC FTA also focuses on some prime objectives. It aims to boost trade between the two regions and achieve the following goals:
- The two regions will have easier access to each other because of the free trade agreement (FTA).
- The FTA is set up to enable greater investment flows between India and the UAE. Also, the bilateral trade agreement opens the potential for a more comprehensive agreement with all six members of the GCC.
- India can grow its exports of food, clothing, and a variety of other things as the GCC is a region that heavily relies on imports.
- For now, 90% of Indian items and 65% of UAE products will initially be duty-free under the agreement, which both countries negotiated in a record-breaking 88 days.
- The focus is also being laid on creating food corridors. This initiative encourages investment from the UAE into India’s food processing and logistics sectors.
The Framework Agreement between both regions was signed on 25 August 2004. So far, in 2006 and 2008, there have been two rounds of negotiations. However, the GCC postponed negotiations and is now reviewing its negotiations with all nations and economic groups. Therefore, the third negotiation round has not yet taken place.
However, the provisions of a free trade deal between India and the Gulf Cooperation Council (GCC) members are being finalized. According to news sources, the negotiations will begin next month (November).
Conclusion The GCC region has vast commercial potential. Thus, FTA will assist increase India’s exports to that market, boosting the economies of both regions. After implementing the trade agreement between India in UAE, the comprehensive trade with GCC is yet to be finalized.