India and the Gulf Cooperation Council (GCC) may start negotiations on a Free Trade Agreement (FTA) from November 24 to boost economic ties. The GCC is a confederation of six countries in the Gulf region: Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman and Bahrain. The official said, ‘The FTA will start on November 24. At the same time, GCC officials will reach India to start this dialogue.
Let us tell you that India has already implemented a free trade agreement with the United Arab Emirates in May this year. Commerce and Industry Minister Piyush Goyal had said on 16 November that India would launch a new Free Trade Agreement (FTA) next week. Even before this, two rounds of talks were held between India and GCC in the years 2006 and 2008, but these talks could not reach the third round because GCC had postponed its talks with all the countries and economic groups.
India imports crude oil from these countries
India mainly imports crude oil and natural gas from Gulf countries such as Saudi Arabia and Qatar, and exports pearls, metals, imitation jewelry, electrical machinery, iron and steel and other precious stones to these countries. According to commerce ministry data, India’s exports to the GCC are set to grow by 58.26 per cent to nearly $44 billion in 2021-22 from $27.8 billion in 2020-21.
According to statistics, the share of these six countries in India’s total exports has increased from 9.51 percent in 2020-21 to 10.4 percent in 2021-22. Similarly, imports increased by 85.8 per cent to $110.73 billion as compared to $59.6 billion in 2020-21. At the same time, the share of GCC members in India’s total imports has increased from 15.5% in 2020-21 to 18% in 2021-22.
Apart from trade, there is a sizeable Indian population living in the Gulf countries. Nearly half of India’s approximately 32 million non-resident Indians (NRIs) are estimated to work in the Gulf countries.
What is Gulf Cooperation Council
The Gulf Cooperation Council (GCC) is a political and economic union of Arab states bordering the Gulf, which was established in the year 1981. The United Arab Emirates, Saudi Arabia, Qatar, Oman, Kuwait and Bahrain are members of this union. Since the discovery of oil, the GCC region has undergone profound changes and is now a group of countries with some of the fastest growing economies in the world.
What is Free Trade Agreement?
An agreement between two or more countries to reduce barriers to the import and export of products and services is called a Free Trade Agreement. Both the countries doing business benefit from this agreement. Free trade agreements will reduce quotas, tariffs, subsidies or restrictions that can limit the movement of goods and services across borders. Whereas Free Trade Agreement can allow free trade between the two countries. The agreement may cover services, investments, goods, intellectual property, competition, government procurement and other areas.
Why free trade agreement is important for India
For India, the Gulf region i.e. GCC is important in many ways. It has historical, political, economic, strategic and cultural importance for India. If there is a free trade agreement between India and GCC, it will strengthen bilateral relations. Talking about the international scenario, while Saudi Arabia is a fading power, the United Arab Emirates, Qatar and Iran are emerging as new regional powers. Apart from this, Oman and Iraq will have to struggle to maintain their identity.
Recently free trade agreement between India and UAE
A free trade agreement was signed between India and UAE in the month of February itself. The agreement was signed by Goyal from the Indian side and Abdullah bin Touq Al Marri, Minister of Economy, UAE. Both countries also issued a framework for further strengthening relations in various fields. The Free Trade Agreement will provide significant benefits to the companies of India and UAE. This includes better market access and lower duty rates. With this FTA, the bilateral trade of both the countries is expected to increase from the current $60 billion to $100 billion in the next five years.
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