Gulf Cooperation Council agrees to de-couple investment pact talks from FTA talks with India

Days after India finalised talks for a Free Trade Agreement (FTA) with Oman, sources have told CNBC-TV18 that the 6-nation Gulf Cooperation Council (GCC) has agreed to de-couple talks for a Bilateral Investment Treaty (BIT) with the Terms of Reference (ToR) for an FTA. ToR is a precursor to an FTA, which defines the scope, rules, and framework for an FTA. A BIT between two countries or blocs determines rules for mutual investment promotion and protection for investors.

Sources indicated that there is a possibility of proceeding for talks for an FTA with the GCC if talks for a BIT are concluded shortly, and in case the delay continues, India will proceed with FTA talks with GCC members Qatar and Bahrain. India already has an FTA with GCC member UAE. The 6-member GCC comprises of Saudi Arabia, UAE, Kuwait, Qatar, Oman, and Bahrain. Saudi Arabia is the largest GCC member in terms of economic size, with a population and land area larger than that of all other GCC members combined.

In December 2024, government sources had told CNBC-TV18 that Saudi Arabia wanted to sign a BIT with India before proceeding with an FTA. However, sources had added that India wasn't too keen to link an FTA with a BIT, which it was separately negotiating with Saudi Arabia. The difference in stand had led to a delay in FTA negotiations.

In 2022, India and the GCC had announced resumption of negotiations after a hiatus of several years, for the potential FTA whose idea was initially floated in 2004. GCC is an important trading partner of India apart from being a place with historical ties and presence of nearly 1 crore Indian workers. India’s economic linkages with the GCC have steadily risen due to growth in oil imports. During FY 2023-24, India-GCC bilateral trade stood at $161.59 billion. While India’s exports were $56.3 billion in FY 2023-24, its imports were $105.3 billion in FY 2023-24.