A planned free trade agreement between India and the six-nation Gulf Cooperation Council (GCC) will largely expand economic and investment links between the two regions, mainly the UAE as New Delhi’s largest Gulf trading partner.
India and the GCC signed a framework agreement to bolster economic cooperation in New Delhi in 2004 and the two sides have been locked in talks to develop the deal into a full FTA on the grounds that it will benefit both of them.
The latest round of talks was held in New York between Indian External Affairs Minister Sushma Swaraj and her GCC counterparts whose nations she said were ‘an extended part of our neighbourhood.’
At the meeting, Swaraj called for the early finalisation of the India-GCC FTA and operationalising the India-GCC Framework Agreement.
The GCC is India’s largest trading partner with $137.7 billion (Dh506 billion) trade in 2014-2015, up from only 5.5 billion (Dh20 billion) in 2001.
More than 50 per cent of India’s oil and gas come from the GCC countries which host over seven million Indian nationals.
“An FTA in the region will benefit India substantially as the GCC countries control nearly 45 per cent of the world's recoverable oil wealth and 20 per cent of gas resources. In turn, the GCC will also benefit from the agreement as it will open up a vast consumer market for them and allow them to acquire technology through Indian industrial investment in their region,” an Abu Dhabi-based economist said.
“The UAE will be the key beneficiary of such a deal as it is India’s largest commercial partner in the region and it has been involved in a drive to attract investment and technology needed for economic diversification…the UAE and India already maintain a strong economic and trade relationship but a FTA will regulate that relationship and consequently push trade and economic cooperation to new horizons.”
In a recent report, the Indian embassy in Riyadh said the GCC, which groups the UAE, Kuwait, Saudi Arabia, Qatar, Bahrain and Oman, has tremendous significance for India. “The GCC constitutes the immediate neighborhood of India separated only by the Arabian Sea. India, therefore, has a vital stake in the stability, security and economic well-being of the Gulf,” the embassy said.
“As a group, the GCC has been increasingly determining the economic, political, and security policies of its member States. The GCC countries are moving ahead rapidly with their economic integration efforts.”
The report said the GCC has emerged as a major trading partner for India and that it has vast potential as India’s investment partner for the future.
“The GCC’s substantial oil and gas reserves are vital importance for India's energy needs….. the GCC countries are collectively host to a large Indian expatriate community. In short, the GCC offers tremendous potential for cooperation in trade, investment, energy, manpower, etc.”
It said that India enjoys traditionally cordial relations and cooperation with the all GCC countries and that these ties are vital for New Delhi.
“India’s old, historical ties with GCC states, coupled with increasing imports of oil and gas, growing trade and investment opportunities, and presence of more than 6.5 million Indian workers in the region, are of vital interest to India,” it said.
“India’s economic linkages with the GCC have increased steadily especially due to growth in oil imports. These continue to make steady progress to-date.”
From the strategic point of view, India and GCC share the desire for political stability and security in the region, the report said.
“The common political and security concerns of India and GCC translate into efforts for peace, security and stability in the Gulf region and South Asia. The emerging common security perceptions create further opportunities for GCC-India cooperation in the future…. the GCC states are going through important changes and transformation….the areas for cooperation are also widening beyond investments, commerce, economy, and development of human resources to security.”