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Ministry of Commerce and Industry
India and Gulf Cooperation Council (GCC) have formally defined the scope and modalities for negotiating a Free Trade Agreement (FTA). Signed on February 5, 2026, in New Delhi, the Terms of Reference (ToR) mark the official commencement of negotiations aimed at providing predictability and stability to one of India’s largest economic relationships. The agreement is expected to enable the seamless flow of goods and services, attract significant investments, and expand employment opportunities across the region.
Trade Dynamics and Economic Integration The formalization of negotiations occurs against the backdrop of rapidly expanding trade and investment ties:
Total Trade Volume: In FY 2024-25, India’s trade with the GCC reached USD 178.56 billion, accounting for 15.42% of its global trade.
Growth Trajectory: Trade between India and the GCC has grown at an annual average rate of 15.3% over the past five years.
Investment Profile: The GCC is a major source of Foreign Direct Investment (FDI) for India, with cumulative investments exceeding USD 31.14 billion as of September 2025.
Community Ties: The region hosts approximately ten million Indian community members, further reinforcing deep-rooted people-to-people and corporate connections.
What are the “Terms of Reference” (ToR) in the context of FTA negotiations? The Terms of Reference (ToR) act as the primary operational roadmap that governs the entire negotiation process of a Free Trade Agreement. They define the specific sectors to be included—such as goods, services, and digital trade—set the timelines for various rounds of talks, and establish the legal and institutional framework for the discussions. By signing the ToR, India and the GCC have moved from informal dialogue to a structured legal phase, ensuring that both sides are aligned on the “scope and modalities” before specific tariff reductions and trade barriers are debated.
Policy Relevance
The signing of the ToR signals a strategic transition toward deeper institutionalized integration between India and the 9th largest global economy. An India-GCC FTA would serve as a “force multiplier” for economic growth, especially in securing long-term energy and food security for the region.
Strategic Impact:
Diversifying Export Baskets: Beyond traditional exports like rice and gems, the FTA offers a pathway to increase the market share of Indian engineering goods and machinery in a market of 61.5 million people.
Energy Security Buffer: As the GCC remains India’s primary source for crude oil, LNG, and petrochemicals, the agreement will provide a regulatory buffer against global supply chain uncertainties.
Capital Mobilization: Formalizing trade ties is expected to accelerate the flow of sovereign wealth fund investments from the GCC into India’s infrastructure and technology sectors.
Protecting the Diaspora Economy: By stabilizing trade relations, the FTA indirectly safeguards the livelihoods and remittances of the ten million Indian expatriates living in the region.
Relevant Question for Policy Stakeholders: How can the Department of Commerce utilize the FTA negotiations to establish a ‘Fast-Track Investment Corridor’ that specifically targets GCC sovereign wealth for India’s semiconductor and green energy manufacturing sectors?
Follow the full news here: India–GCC Free Trade Agreement ToR Signing | PIB