India’s next big trade bet: Why an FTA with six Gulf nations matters and why it's bad new for Pakistan | Explained

Union Minister of Commerce and Industry Piyush Goyal witnesses the signing of the Terms of Reference (ToR) for the Free Trade Agreement (FTA) between India and the Gulf Cooperation Council (GCC), in New Delhi on February 5, 2026.

India has launched formal free trade agreement talks with the Gulf Cooperation Council, aiming to boost trade and investment. This follows recent deals with the EU and US, strengthening India’s global trade position and strategic ties with Gulf nations.

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India has taken another major step in expanding its global trade footprint by formally launching negotiations for a free trade agreement with the Gulf Cooperation Council (GCC). On Thursday, Union Commerce Minister Piyush Goyal announced that India and the six-nation bloc had signed the Terms of Reference for a potential FTA, setting the stage for detailed negotiations aimed at boosting trade and investment flows.

The move follows a series of high-profile trade breakthroughs for New Delhi. In recent weeks, India concluded negotiations with the European Union and reached a trade agreement with the United States, signalling a more assertive and confident trade strategy. With talks now resuming with the GCC, India is positioning itself as a key economic partner across major global regions.

What the GCC is and why it matters

The GCC is a regional bloc comprising Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Oman, and Bahrain. Established in 1981, the grouping aims to promote economic, political, and social cooperation among its members. Over the years, it has emerged as a major hub for energy, finance, infrastructure, and logistics.

India’s engagement with the GCC is not new. Trade talks were first launched in 2004 but were later suspended in 2011 after the bloc paused its global trade negotiations. Discussions resumed in 2022, and Thursday’s signing of the ToR marks the most concrete progress since then.

“At the event, Goyal said, ‘With India deepening its trade engagements with the developed world, the stage is set for unlocking the full potential of a mutually-beneficial economic relationship with the GCC.’”

Delighted to witness the signing of the Terms of Reference for the FTA between India and the Gulf Cooperation Council (GCC) by our chief negotiators. Under PM @NarendraModi ji's leadership, our ties with the 6-nation GCC (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the… pic.twitter.com/7tPHmKSStk

— Piyush Goyal (@PiyushGoyal) February 5, 2026

The first round of negotiations is expected to take place in Riyadh in the coming months. Ajay Bhadoo will lead negotiations for India, while Raja Al Marzouqi will represent the GCC.

Strong economic logic behind the deal

The GCC is one of India’s most important economic partners. Around 10 million Indians live and work in the Gulf, making people-to-people ties exceptionally strong. The region is also critical for India’s energy security, while India plays a major role in food security and infrastructure development for Gulf nations.

Goyal underlined this long-standing relationship, saying, “The two trading partners have been trading amongst each other for over 5,000 years.” He added, “It is most appropriate that we now enter into a much stronger and robust trading arrangement which will enable a greater free flow of goods, services, bring predictability and stability to policy, and help encourage a greater degree of investments.”

Bilateral trade has remained robust, crossing $170 billion in recent years. The UAE is India’s largest trading partner in the bloc, followed by Saudi Arabia. India already has a free trade pact with the UAE and a CEPA with Oman, making a broader GCC deal a logical next step.

Why this is likely to unsettle Pakistan

India’s renewed push with the GCC also carries strategic implications that extend beyond trade. The timing is notable, coming amid Pakistan’s deepening economic distress and its attempts to reposition itself as a defence and strategic partner for Gulf states.

Recent reports have highlighted Pakistan’s efforts to offset debt by offering military hardware and defence cooperation instead of financial repayments. At the same time, key regional players like Turkey have distanced themselves from Islamabad’s attempts to build a broader Islamic defence bloc involving Saudi Arabia.

India’s growing economic integration with the GCC strengthens New Delhi’s position as a stable, reliable, and growth-oriented partner, in contrast to Pakistan’s debt-driven outreach. A comprehensive India-GCC trade agreement would further anchor Gulf economies to India’s growth story, reducing Islamabad’s strategic space in the region.

A clear signal of India’s trade momentum

The resumption of GCC talks comes just days after the India-EU trade agreement and the announcement of a US-India trade deal that reduced American tariffs on Indian goods to 18 per cent. Together, these moves reflect a deliberate strategy to lock in market access, diversify trade partners, and position India at the centre of global supply chains.

As India presses ahead with the GCC, the message is clear. New Delhi is no longer a cautious participant in trade negotiations. It is shaping them on its own terms, with growing confidence and expanding influence across regions that matter.