How de-linking Saudi investment talks fast-tracked India‑Gulf trade deal

The GCC bloc includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates

An understanding between India and Saudi Arabia may have helped advance a long‑awaited free trade agreement with the Gulf Cooperation Council (GCC).

India is moving forward with the Terms of Reference (ToR) for a trade pact with the GCC, set for signing on February 5. The bloc, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, represents an important part of India’s trade and investment engagement in the region.

A government source said that both sides have now agreed to de‑link negotiations on the Bilateral Investment Treaty (BIT) from the trade agreement, allowing talks on the GCC deal to move forward without getting held up by unresolved investment issues.

“There is an agreement now to de‑link the Bilateral Investment Treaty (BIT) from the trade agreement. The BIT will proceed on its own, as earlier both sides had considered linking it with the Bilateral Trade Agreement (BTA),” the source said.

This given differences between the two sides on issues around investment protections, including Most‑Favoured‑Nation (MFN) obligations and international investor‑state dispute mechanisms.

These provisions are often part of investment treaties.

The source explained that while a BIT with Saudi Arabia is seen as advantageous for India, the country would want to pursue it on its own terms. Since some issues on investment remain unresolved, both sides see separating the two negotiation tracks as a practical way to advance the trade agreement with the Gulf bloc.

“India wants investments, but on its own terms and conditions, no Most‑Favoured‑Nation clauses and no international investor‑state dispute mechanisms. Saudi Arabia is a major investor, and they don’t want such conditions. They prefer a Bilateral Trade Agreement (BTA), which is more advantageous for them, while the Bilateral Investment Treaty (BIT) is more beneficial for India. So, we have decided to go ahead with the trade agreement and the BIT will be pursued separately,” the source added.

The trade pact with the GCC has been under discussion for nearly two decades, with earlier rounds of negotiations in 2006 and 2008 stalling under a previous government.

The source added that once the trade agreement with the GCC is in place, and with India already having trade deals with Oman and the UAE, around 90 percent of common tariff rules will be covered.

Only 4–5 percent of goods will remain outside the framework for the Gulf bloc, mainly affecting countries like Qatar and Bahrain in the absence of separate pacts, the source said.

To be sure, India has been in talks to seek bilateral trade pacts with Qatar and Bahrain.

Bilateral trade between India and the GCC has grown significantly over the years, reaching around $162–178 billion in recent years, with the UAE and Saudi Arabia among India’s largest partners in the region.

India exports a wide range of goods to the Gulf, including food products, textiles, jewellery, pharmaceuticals, and engineering items, while energy imports such as crude oil, LNG, and LPG form a significant part of the trade