Saudi Arabia wants a Bilateral Investment Treaty (BIT) with India before moving ahead with a Free Trade Agreement (FTA), according to government sources. However, India is not keen to link an FTA with a BIT, which it is negotiating separately with Saudi Arabia.
This difference in approach has led the Indian government to believe that signing an FTA with the Gulf Cooperation Council (GCC) is unlikely in the near term, and negotiations will take longer. Saudi Arabia is the largest GCC member by economy, population, and land area, surpassing all other members combined.
In 2022, India and the GCC announced the resumption of negotiations for a potential FTA after a hiatus of several years. The idea of an FTA with the GCC was first floated in 2004. The GCC is a six-member economic bloc comprising Saudi Arabia, the UAE, Kuwait, Qatar, Oman, and Bahrain. Apart from historical ties and the presence of nearly 9 million Indian workers, the GCC is a significant trading partner for India.
Economic linkages have grown over the years, largely due to increased oil imports. In FY 2023-24, India-GCC bilateral trade reached $161.59 billion, with Indian exports accounting for $56.3 billion and imports for $105.3 billion.
Last year, India offered GCC member countries the option to sign individual FTAs instead of a collective agreement. India already has an FTA with the GCC member UAE. Foreign trade experts believe the FTAs with the UAE and Oman could serve as templates for future agreements with other GCC nations.
India is close to finalising an FTA with Oman, having completed negotiations on most chapters last year. However, the India-Oman FTA remains stalled over unresolved issues related to market access for petrochemical products.