India has continued to foster a healthy relationship with most foreign powers, especially with the Middle-Eastern countries. India holds great interest in these countries for import and export-related trade ties, and due to the reason that these Gulf countries are home to a substantial amount of the non-resident Indians (NRI) population. The Middle East has also continued to strengthen ties with India, through positive trade relations, with accessibility between these countries being made more convenient: cheap flights are easily available throughout the year.
India is gearing up to resume talks with the Middle East and launch a Free Trade Agreement (FTA) by negotiation with the six Gulf Cooperation Council (GCC) countries- the UAE, the Kingdom of Saudi Arabia, Qatar, Kuwait, Oman, and Bahrain. The talks would pick up from the previous Free Trade Agreement (FTA) talks held in 2006 and 2008 following negotiations between India and GCC. The third round is currently taking place right now.
The finalisation of the trade pact is expected to take time, as there are some differences in regional, and intergovernmental interests. GCC members also have the option to join the India-UAE trade agreement if there are further delays in the FTA arrangement between India and GCC.
Meanwhile, India had already spelled out a free trade pact with the Emirates back in May. India’s bilateral trade with the UAE steadily increased to $72.9 billion in 2021-22, compared to $43.3 billion in the previous fiscal year. According to the latest data released by the Ministry of Commerce, the share of the GCC countries in India’s total exports has risen from 9.51% to 10.4% in just a year.
The free trade pact announcement is anticipated to positively accelerate this growth trend further. Crude oil and natural gas from oil reserves in the Middle East form basic sources of export from the GCC countries to India, along with other essential natural resources such as steel, iron, machinery equipment, as well as precious metals and jewellery.
After departing from the Regional Comprehensive Economic Partnership with China in 2019, India has increased efforts to create profitable trade pacts with critical foreign countries. India is also in the process of arranging to commence FTA talks with other pivotal economies, such as Israel, the UK, Canada and the European Union.
In addition to strengthening trade ties, the countries seek to bolster food security, along with addressing issues such as regulatory and logistic methods for food items. India and the UAE have already announced a joint food security cooperation under the I2U2, a quadrilateral that includes the US and Israel.
