(Image source from: AFP)
In the midst of trade conflicts and tariff obstacles hindering international trade, the Gulf countries are becoming an important market for India. At present, the Gulf Cooperation Council—which consists of six Middle Eastern countries—is India's biggest trading partner, surpassing the European Union, ASEAN, and even its top bilateral trading partners like the United States and China. The trade between India and the GCC reached around $179 billion during 2024-25, fueled by CEPA agreements with the United Arab Emirates and Oman, with key exports including precious stones, metals, electronics, and chemicals. New Delhi is now working on establishing a free trade agreement with the six-nation group, which includes Saudi Arabia, the UAE, Qatar, Kuwait, Oman, and Bahrain. India has already put a free trade agreement into effect with the UAE in May 2022. India also has a Comprehensive Economic Partnership Agreement with Oman, signed in Muscat on December 18, 2025. The new free trade agreement will help Indian exports by removing tariffs and other trade barriers with the other nations as well.
The Gulf area is crucial for India’s energy security and is home to 10 million Indians.
On Thursday, India and the GCC agreed on the terms for starting formal discussions for a free trade agreement. These terms explain the scope and formats of the proposed trade deal. The signing ceremony for these terms was chaired by Commerce and Industry Minister Piyush Goyal. He stated that the agreement would enhance trade and investments between the two. “The partners have been trading with each other for over 5,000 years,” he mentioned to the press. “It is fitting that we now create a much stronger trading arrangement, which will allow for better movement of goods and services, bring more predictability and stability to policies, and encourage increased investment,” Goyal added. The minister also noted that the deal would help in ensuring food and energy security in the GCC countries and energy security for India. While India is a significant producer of food grains globally, the GCC nations export oil and gas.
“Our trade is already strong, nearly reaching $179 billion. I believe that many products and services needed by the GCC countries can be supplied by our young and talented Indians, while the GCC nations can assist us in further diversifying and increasing our energy sources,” he said. With a free trade agreement, India's petrochemical sector and information and communication technology companies are expected to find better prospects in the growing GCC market. Starting discussions for the free trade agreement with the GCC would mark a restart of previous negotiations, as earlier rounds occurred in 2006 and 2008 between the regions. The third round did not take place because the GCC postponed its negotiations with all countries and economic groups.
Economist, adviser to the United Nations, and professor at Columbia University, Jeffrey Sachs, thinks that the Gulf region will become the next significant market for India. He mentioned, "The major growth is happening nearby. The major growth is taking place in Southeast Asia. The major growth is unfolding in China, as India and China should engage in trade with one another. The major growth is also occurring in Western Asia, where there is substantial wealth in the Gulf. Africa will experience rapid growth. Therefore, India should not rely too heavily on the market in the US."
India mostly imports crude oil and natural gas from Gulf countries such as Saudi Arabia and Qatar and exports items like pearls, precious and semi-precious gems, metals, fake jewelry, electrical devices, iron and steel, and various chemicals to these nations. In the fiscal year 2024-25, India's exports to the Gulf Cooperation Council (GCC) increased by almost one percent to around $57 billion, compared to $56.32 billion in 2023-24. Imports surged by 15.33 percent to $121.7 billion in 2024-25, up from $105.5 billion the previous year. The total trade between India and the Gulf reached $178.7 billion in 2024-25, growing from $161.82 billion in 2023-24. The UAE was India's third-largest trade partner last fiscal year, with exports amounting to $36.63 billion and imports at $63.40 billion, leading to a trade deficit of $26.76 billion in 2024-25.
Saudi Arabia ranked as India's fifth-largest trading partner in the last fiscal year. Exports to Saudi Arabia totaled $11.75 billion, while imports were $30.12 billion, resulting in a trade deficit of $18.36 billion in 2024-25. Qatar was India's 22nd-largest trading partner last fiscal year, with exports at $1.68 billion and imports at $12.46 billion, leaving a trade deficit of $10.78 billion in 2024-25. India predominantly imports liquefied natural gas (LNG) from Qatar, while exporting various products like cereals, meat, fish, chemicals, and plastics. Oman was India's 28th largest trading partner in 2024-25, with exports reaching $4 billion and imports totaling $6.54 billion, resulting in a trade deficit of $2.48 billion.
Kuwait was India's 29th trading partner in 2024-25. Exports amounted to $1.93 billion, while imports reached $8.28 billion, leading to a trade deficit of $6.35 billion.
Likewise, India's exports to Bahrain, which was the 65th largest trading partner, were $797.47 million last fiscal year. Imports totaled $843.44 million, resulting in a trade deficit of $45.97 million in 2024-25.
