India and the Gulf Cooperation Council (GCC)

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    • Recently, India and the Gulf Cooperation Council (GCC) have decided to pursue resumption of Free Trade Agreement (FTA) negotiations. 
      • Earlier attempts were made in 2006 and 2008 but were not successful. 

    What is a Free Trade Agreement (FTA)?

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    • A free trade agreement is a pact between two or more nations to reduce barriers to imports and exports among them.  
    • Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange
    • The concept of free trade is the opposite of trade protectionism or economic isolationism.

    Gulf Cooperation Council (GCC) 

    • The GCC comprises:
      • Saudi Arabia
      • UAE
      • Qatar
      • Kuwait
      • Oman
      • Bahrain
    • GCC is currently India’s largest trading partner bloc with bilateral merchandise trade valued at over 154 billion US dollars in the financial year 2021-22. 
    • Bilateral trade in services between India and the GCC was worth 14 billion US dollars.
    • GCC countries contribute almost 35 per cent of India’s oil imports and 70 percent 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 stood at about $21 billion.
    • India’s exports to the GCC member countries grew by over 58% to about $44 billion in 2021-22 against nearly $28 billion in 2020-21.     

    Pending and successful FTA with India 

    • Pending FTA’s – India is trying to negotiate trade deals with the UK, European Union, Canada and Israel.  
    • Successful FTA’s
      • Comprehensive Economic Partnership Agreement (CEPA) – India and UAE. 
      • Economic Cooperation and Trade Agreement (ECTA) – India and Australia.
      • Comprehensive Economic Cooperation Partnership Agreement (CECPA) – India and Mauritius.
      • Asia Pacific Trade Agreement – Bangladesh, China, India, Lao PDR, Republic of Korea, Sri Lanka.
      • South Asia Free Trade Agreement – India, Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan, and the Maldives.
      • Indo Sri Lanka Free Trade Agreement – Sri Lanka and India.
      • India Singapore Comprehensive Economic Cooperation Agreement – Singapore and India.
      • Japan India Comprehensive Economic Partnership Agreements – Japan and India.
      • India Korea Comprehensive Economic Partnership Agreements – South Korea and India.

    Significance of the India and GCC FTA  

    • Trade potential: The GCC region holds huge trade potential and a trade agreement would help in further boosting India’s exports to that market.
    • Oil and gas reserves: The GCC’s substantial oil and gas reserves are of utmost importance for India’s energy needs.
    • Good relations: India shares good relations with most of the countries in the Gulf.
    • India can increase its exports: GCC is a major import dependent region. India can increase its exports of food items, clothing and several other goods. 
      • Duty concessions under a trade agreement will help in tapping that market.
    • India needs to develop a cohesive approach to develop ties in diverse areas such as renewables, water conservation, food security, digital technology and skills development.

    Source: PIB