MC EXCLUSIVE India-Gulf bloc FTA talks likely only in second half of the year as Iran war rages

The GCC is India’s largest trading partner in West Asia, with bilateral trade exceeding $178 billion in FY25, and hosts around 10 million Indians, making a trade deal with the bloc significant.

• India-GCC FTA talks delayed to second half of 2026
• West Asia conflict hikes India's oil shipping costs
• GCC is India's top West Asian trade partner at $178B.

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India and the Gulf Cooperation Council (GCC) are likely to hold the first round of negotiations for the free trade agreement (FTA) only in the second half of the year, as the Iran war continues to rage, a senior government official told Moneycontrol.

“They are only looking to talk in the second half of 2026, not before that, one of the reasons being the West Asia crisis,” the official said.

On February 28, the US and Israel launched strikes on Iran, which retaliated and the war has since spread to other countries in West Asia.

The conflict has disrupted key shipping routes, especially the Strait of Hormuz, through which about 20 percent of the world’s oil and LNG flows.

Gulf countries have faced temporary shutdowns at oil terminals, higher shipping costs and delays in exports, putting pressure on their economies.

For India, which imports a significant amount of its crude oil and LNG from the Gulf, these disruptions have raised energy costs and led to hurdles in exports and logistics.

The delay in initiating the first round of talks for the FTA between India and the GCC is also attributable to the Gulf bloc's complex decision-making system.

“It is also because they have a complicated system, so therefore the first round of talks will be in the second half,” the official explained.

The bloc, comprising Saudi Arabia, the UAE, Qatar, Kuwait, Oman, and Bahrain, typically internally reviews and aligns on sensitive sectors, negotiating positions, tariff lines, services commitments, and investment protections before formal talks can begin.

In February, India and the GCC signed the Terms of Reference (ToR) to launch FTA negotiations.

While the ToR sets the scope and procedural framework for the agreement, it does not finalise detailed tariff schedules, market access commitments, or rules of origin.

The GCC is India’s largest trading partner in West Asia, with bilateral trade exceeding $178 billion in FY25, and hosts around 10 million Indians, making a trade deal with the bloc significant.

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