India and Gulf Cooperation Council nations signs Terms of Reference for an FTA

Representatives of India and the six-nation Gulf Cooperation Council (GCC) on Thursday (February 5, 2026) signed the Terms of Reference for negotiations on a free trade agreement (FTA). The GCC countries are together India’s largest merchandise trade partners, with total merchandise trade exceeding that done with even the European Union and the U.S.

The Terms of Reference (ToR) were signed by India’s chief negotiator for the FTA, Additional Secretary Ajay Bhadoo, and his counterpart representing the Secretariat General of the Gulf Cooperation Council, Raja Al Marzouki. The signing of the ToR is a necessary precursor for the start of formal negotiations. The GCC countries are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE).

‘Strategic economic partner’

“Many of us are aware that discussions [on moving towards a trade deal] have been going on for nearly two decades,” Commerce and Industry Minister Piyush Goyal, who presided over the signing, said in his speech. “Under Prime Minister Narendra Modi’s leadership, the six-nation GCC group has transformed into a strategic economic partner.”

“It is most appropriate that we now enter into a much stronger and robust trading arrangement, which will enable a greater free flow of goods and services, bring predictability and stability to policy, help encourage greater degree of investments and take our bilateral relations between the six nation GCC group and India to greater heights,” Mr. Goyal added.

Largest goods trade

Data from the Ministry of Commerce and Industry shows that India’s total bilateral merchandise trade with the GCC countries stood at $178.5 billion in 2024-25, the latest full year for which there is data. This is higher than India’s total bilateral merchandise trade with the European Union ($136.5 billion), the U.S. ($132.1 billion), and China ($127.7 billion), making the grouping India’s largest goods trading partner.

There are about 10 million Indians living and working in the GCC region.

However, the data also shows that 56% of India’s total bilateral merchandise trade with the GCC countries is with just the UAE, with which India already has a separate FTA. Further, the data shows that India had a trade deficit of $64.8 billion with the GCC countries in total in 2024-25, with the UAE itself accounting for $26.7 billion of this deficit amount due to India’s large gold, oil, and petroleum products imports from that country.

The other GCC country with which India has signed an FTA is Oman.

Bilateral benefit

Mr. Goyal pointed out that the two sides could significantly benefit from each, with India’s workforce both within the GCC countries as well as in India standing to gain from the eventual agreement.

“The GCC countries can help us with further diversification and growth of our energy sources, opportunities for our youth, and massive amounts of investments that different countries have already committed at different points of time, which will further get an impetus with a free trade agreement between India and the GCC nations,” he added.