India-GCC FTA Terms of Reference Signed: Building Bridges Across the Arabian Sea

On 5 February 2026, India and the Gulf Cooperation Council (GCC) signed the Terms of Reference (ToR) to begin formal negotiations. This decision can reshape India’s trade, energy security, and investment flow. The development is important for the economy, global trade relations, and competitive exams. The agreement aims to make trade easier, safer, and more predictable for both sides.

India-GCC Free Trade Agreement: Why It Is in News

• The India-GCC Free Trade Agreement came into focus after the signing of its ToR at Vanijya Bhawan, New Delhi.
• The agreement was signed by Ajay Bhadoo and Raja Al Marzouqi.
• The event was attended by Piyush Goyal, Jitin Prasada, and Rajesh Agrawal.
• The ToR defines the scope, structure, and negotiation method of the India-GCC Free Trade Agreement. This marks the formal beginning of talks aimed at a balanced and mutually beneficial trade pact.

What the Terms of Reference Mean for India-GCC Free Trade Agreement

• The Terms of Reference act as a roadmap for the India-GCC Free Trade Agreement negotiations.
• They outline which sectors will be covered, how discussions will proceed, and what goals both sides want to achieve.
• According to the Indian government, the ToR ensures clarity and avoids confusion during negotiations.
• It also brings predictability for businesses and investors. By setting clear rules from the start, the India-GCC Free Trade Agreement can progress faster and reduce trade barriers.
• This structured approach is crucial at a time when global trade faces uncertainty and supply chain disruptions.

India-GCC FTA and India’s Trade Performance

• The India-GCC Free Trade Agreement is important because the GCC is one of India’s largest trading partners.
• India’s trade with GCC reached USD 178.56 billion in FY 2024-25, forming 15.42% of India’s total global trade.
• Exports stood at USD 56.87 billion, while imports were USD 121.68 billion.
• Over the last five years, trade grew at an average rate of 15.3% per year.
• With the India-GCC Free Trade Agreement, this growth is expected to accelerate by reducing tariffs and improving market access.

Key Sectors Covered Under FTA

• The India-GCC Free Trade Agreement covers several critical sectors.
• India mainly exports engineering goods, rice, textiles, machinery, and gems and jewellery to GCC nations.
• In return, India imports crude oil, LNG, petrochemicals, and gold.
• Energy security is a major concern for India, and the agreement can ensure stable supplies.
• The India-GCC Free Trade Agreement also opens doors for services, logistics, and digital trade.
• This balanced sectoral coverage strengthens long-term economic cooperation between both sides.

Investment, Jobs and Strategic Importance

• The India-GCC Free Trade Agreement is not limited to goods trade. GCC countries have invested over USD 31.14 billion in India till September 2025.
• The agreement is expected to attract more foreign direct investment, generate employment, and support food and energy security.
• GCC countries together have a GDP of USD 2.3 trillion and a population of 61.5 million.
• Nearly 10 million Indians live in the GCC region, strengthening people-to-people ties.
• This makes the India-GCC Free Trade Agreement strategically important for India’s global positioning.

About Gulf Cooperation Council (GCC)

Overview of GCC

Aspect	Details
Established	1981
Type	Regional political and economic alliance
Member Countries	Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE
Objectives	Economic, security, cultural, and social cooperation
Background	Formed due to regional tensions like the Iranian Revolution (1979) and Iran–Iraq War (1980–1988)
Headquarters	Riyadh, Saudi Arabia

Organizational Structure of the GCC

Body	Description
Supreme Council	Highest authority; consists of heads of member states; presidency rotates alphabetically; meets annually
Ministerial Council	Composed of foreign ministers or representatives; proposes policies and implements Supreme Council decisions
Secretariat General	Prepares studies and coordinates cooperation, integration, and joint Gulf initiatives

Key Summary at a Glance

Aspect	Details
Why in News?	Signing of Terms of Reference for India–GCC Free Trade Agreement
Date & Place	5 February 2026, Vanijya Bhawan, New Delhi
Key Purpose	Start formal negotiations for a comprehensive FTA
Trade Value	USD 178.56 billion (FY 2024–25)
Strategic Impact	Trade growth, energy security, investment, jobs

Question

Q. Which of the following is a major import by India from GCC countries?

A. Rice
B. Textiles
C. Crude Oil
D. Engineering Goods