India now sets sights on free trade agreement with Gulf countries

Engagements to begin next month; UAE template to make it easier, say experts

After inking trade pacts with the UAE and Australia, India is set to begin deeper engagements with the Gulf Cooperation Council (GCC) countries as early as May-June to finalise a free trade agreement (FTA) with the group of nations, people aware of the matter said.
 

GCC is a regional, intergovernmental political economic union comprising six countries — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE).
 

An official said that as of now tariff and trade data has been exchanged with GCC nations to explore the possibility of a trade pact. “India is engaging with GCC nations to see the gains in trade as well as various other aspects. Since the UAE is also a part of GCC, we already have a template. Depending on GCC’s interest, we will have to see how we can take it forward,” an official told Business Standard.

Engagements with the GCC countries are expected to pick up after Ramandan in May, the official said, adding that the India-UAE Comprehensive Economic Partnership Agreement (CEPA) will also be implemented by them. The India-UAE CEPA was signed in February and the trade agreement is expected to come into effect from May 1.

Government officials and exporters said finalising a trade deal with GCC could be easier. Now that India has carved out an FTA with the UAE, it will be easier to make similar offers to GCC countries, since the profile of countries are similar, they said. Besides, in the case of most of the products, there is less competition and more complementarities in terms of nature of trade.
 

Even in the past, India and the GCC signed a framework agreement on economic cooperation to explore the possibility of FTA between them, more than 17 years ago. Thereafter, two rounds of negotiations took place in 2006 and in 2008. However, after the two rounds, the economic union deferred its negotiations with all countries and economic groups.
 

Ajai Sahai, director-general (DG) and chief executive officer (CEO) of Federation of Indian Export Organisations (FIEO), said that as compared to the past, approaches to FTAs have become far more comprehensive and not confined to just trade.
 

“In the earlier days, focus was mainly on trade. But today, we are looking at other opportunities — whether investment can go from India, whether we can get support from India in digital trade, what would be an opportunity in government procurement. India’s stature has also gone up internationally in the past 10-15 years, which is also helping the country,” Sahai said.

GCC is the fourth-largest trading partner for India following North America, EU, and North-East Asia.
 

India’s exports with the six GCC nations stood at $34.86 billion during April-January, while imports stood at $86.95 billion. The share of exports was 10 per cent as compared to the total exports, while that of imports stood at 17.6 per cent.

Of total imports from West Asia, nearly two-thirds consist of petroleum products. Besides, the UAE and Saudi Arabia make up for most of the trade with the GCC.