Trends in bilateral trade and investment between India and the GCC

India’s trade and investment relations with Gulf Cooperation Council (GCC) member states – UAE, Saudi Arabia, Kuwait, Qatar, Oman and Bahrain – are built on solid foundations, driven by ties India’s historical relationships with the region, India’s dependence on Gulf energy exports and the Gulf’s dependence on India for food security and agricultural exports. Most of the GCC member countries have seen an increased inflow of investment from India towards their development plans. Additionally, the UAE and Saudi Arabia are increasing their trade engagement with India and have become India’s third and fourth largest trading partner respectively. This growing economic synergy could give new impetus to India-GCC Free Trade Agreement (FTA) talks, which have been ongoing since 2004.


India’s economic ties with the six member countries of the Gulf Cooperation Council (GCC) have always been strong, with the GCC’s large oil and gas reserves supplying the bulk of India’s energy needs. At the same time, India is important for GCC food security considerations. Therefore, India and the GCC have recognized and formalized their relationship as a “strategic partnership”.

These business ties have further improved since 2015 through cooperation in trade, investment, diaspora engagement, counter-terrorism and security cooperation.

Official data suggests that India’s bilateral trade with the six members of the GCC countries, including the United Arab Emirates (UAE) and Saudi Arabia, increased significantly in the financial year 2021-22 due growing economic engagement between the two regions. These growing numbers are gaining momentum as India plans to negotiate a Free Trade Agreement (FTA) with the GCC.

What is GCC?

GCC, headquartered in Riyadh, Saudi Arabia, was established by an agreement concluded in 1981 between Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates given their special relationship, geographical proximity, similar political systems based on Islamic beliefs, common destiny and common goals. She followed the Islamic revolution in Iran in 1979.

The GCC charter calls the Council a political, economic, social and regional organization.

The structure of the GCC includes the Supreme Council (the highest authority), the Ministerial Council and the General Secretariat.

India-GCC Strategic Relations

  • India-CCG Industrial Conference: The first GCC-India Industrial Conference was held in Mumbai in February 2004, the second in Muscat, Oman in March 2006, the third in Mumbai in May 2007 and the fourth in King Abdullah Economic City, Jeddah, Saudi Arabia, in November 2015. The fifth GCC conference is scheduled to be held in November 2022 in India.
  • India-GCC FTA: India and the GCC signed a framework agreement to enhance and develop economic cooperation between the two parties in New Delhi in August 2004. Two rounds of talks to finalize aspects such as tariff rules, rules of origin, etc took place. The India-GCC FTA is under negotiation and could get a boost from the India-UAE FTA.

Trade and investment trends between India and the GCC

According to data from the Indian Ministry of Commerce, bilateral trade between India and the GCC increased to US$154.73 billion in 2021-22 from US$87.4 billion in 2020-21. India’s exports to the GCC saw an increase of 58.26% to around $44 billion in 2021-22 from $27.8 billion in 2020-21.

The share of these six countries in India’s total exports increased to 10.4% in 2021-22 from 9.51% in 2020-21. The data suggests that imports also increased by 85.8% to $110.73 billion from $59.6 billion in 2020-21. The share of GCC members in India’s total imports increased to 18% in 2021-22 from 15.5% in 2020-21.

India’s top three exports to GCC member countries include crude oil (40%), petroleum gas (18%) and diamonds (8%). Meanwhile, India’s import basket from the GCC includes refined petroleum (14%), jewelry (8%) and rice (7%).

Trade and investment overview:

  • The United Arab Emirates, one of the six member countries of the GCC, is India’s third largest trading partner, after the United States and China. At the same time, it is among the top 10 source countries of Foreign Direct Investment (FDI) inflows to India. In 2022, India and the United Arab Emirates signed a Comprehensive Economic Partnership Agreement (CEPA). Under the agreement, the UAE is set to eliminate duties on 80% of its tariff lines, which account for 90% of Indian exports to the UAE by value. This agreement is expected to bring the total value of bilateral trade in goods to over US$100 billion and that of trade in services to over US$15 billion within five years. The main domestic sectors that are expected to benefit are gemstones and jewelry, textiles, leather, footwear, sporting goods, engineering goods, automobiles and pharmaceuticals. India and the UAE are also part of the I2U2 (India-Israel-US-UAE) economic framework, under which the UAE has announced an investment of US$2 billion to develop integrated food parks in India.
  • Saudi Arabia is India’s fourth largest trading partner with a total trade volume of US$42.9 billion in 2021-2022.
  • Qatar is another important partner for India, accounting for 41% of India’s total natural gas imports. India and Qatar have recently launched the “India-Qatar Start Up bridge” which aims to connect the start-up ecosystems of the two countries.
  • Oman is also home to many important Indian financial institutions as well as companies that have invested in sectors such as iron and steel, cement, fertilizers, textiles, etc. bilateral trade in 2020-21 (April 2020 to February 2021) stood at US$4.63 billion. Trade between Oman and India benefits from the fact that Oman’s ports are five days sailing time from the west coast of India. In 2021, India said it was considering an FTA with Oman.

India-GCC trade statistics (millions of dollars)

Year

Saudi Arabia

United Arab Emirates

Oman

Kuwait

Qatar

Bahrain

Total

Imports

2017-18

22,070

21,739

4,264

7,166

8,409

431

64,079

2018-19

28,479

29,785

2,759

7,431

10,722

540

79,716

2019-20

26,857

30,257

3,669

9,574

9,686

422

80,465

2020-21

16,187

26,623

3,088

5,214

7,930

547

59,589

Exports

2017-18

5,411

28,146

2,439

1,366

1,472

557

39,391

2018-19

5,562

30 127

2,246

1,334

1,611

742

41,622

2019-20

6,237

28,854

2,262

1,287

1,268

559

40,466

2020-21

5,857

16,695

2,355

1,287

1,285

528

87,364

FDI Inflows into India from GCC Countries (April 2020 – March 2022) (USD Million)

Saudi Arabia

3,145.90

United Arab Emirates

12,225.13

Oman

561.04

Kuwait

87.53

Qatar

488.01

Bahrain

181.66

Indian Diaspora in GCC member countries

It should be noted that India was the largest recipient of remittances in the world in 2021, receiving around $87 billion, of which around 50% came from the GCC region, according to a World Bank report. The GCC countries together host about 6.5 million Indians.


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