India-China rivalry revives bid for FTA with GCC; energy security gains urgency

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By Our Special Correspondent

New Delhi, November 25: With energy security gaining urgency on the back of the Russian invasion of Ukraine, India and the Gulf Cooperation Council (GCC) have decided to pursue resumption of Free Trade Agreement (FTA) negotiations. The development has come amid China upping the scale of its engagement with GCC countries after signing a 27-year contract with Qatar for supply of natural gas.

The GCC is India’s largest trading block, while being the principal source of oil and gas, besides also attracting a large number of India’s trained manpower as the gulf countries seek to reinvent their economies beyond the fossil fuel business. Along with the European Union, the GCC is on the radar of India for an FTA on the lines of the pacts with the UAE, Australia, Japan and Asean. The comprehensive FTA with the GCC may help India to gain access to the rich gulf nations for easier access for its services and trained manpower. Remittances sent by the Indian working overseas almost equal the foreign direct investments (FDI) in the country.

“The FTA with the GCC can help create numerous jobs and raise living standards of the people. The FTA will significantly expand and diversify India’s trade with its largest trading bloc GCC,” said the Ministry of Commerce in an official statement. Piyush Goyal, Minister of Commerce and Industry, and Nayef Falah M. Al-Hajraf, Secretary General, Gulf Cooperation Council (GCC), held a joint presser in the national capital on Friday to announce the intent to pursue negotiations on the India-GCC FTA.

Both sides agreed to expedite conclusion of the requisite legal and technical requirements for formal resumption of the FTA negotiations. “The FTA is envisaged to be a modern, comprehensive agreement with substantial coverage of goods and services. Both sides emphasized that the FTA will create new jobs, raise living standards, and provide wider social and economic opportunities in India and all the GCC countries. Both sides agreed to significantly expand and diversify the trade basket in line with the enormous potential that exists on account of the complementary business and economic ecosystems of India and the GCC,” added the Ministry.

The GCC is currently India’s largest trading partner bloc with bilateral trade in FY 2021-22 valued at over $154 billion with exports valued at approximately $44 billion and imports of around $110 billion (non-oil exports of $33.8 billion and non-oil imports of $37.2 billion). Bilateral trade in services between India and the GCC was valued at around $14 billion in FY 2021-22, with exports valued at $5.5 billion and imports at $8.3 Billion. The GCC countries contribute almost 35 per cent of India’s oil imports and 70 per cent of gas imports. India’s overall crude oil imports from the GCC in 2021-22 were about $48 billion, while LNG and LPG imports in 2021-22 were about $21 billion. Investments from the GCC in India are currently valued at over $18 billion.