India-GCC relations: From historical bonds to strategic dialogue

During the first India-GCC Joint Ministerial Meeting for Strategic Dialogue, held in Riyadh on September 9, the two sides emphasised on the significance of bolstering cooperation across various sectors, including trade, investments, energy, infrastructure, and healthcare. 

The growing India-GCC relations build on long-time historical ties. How have India-GCC ties evolved over time? How does the GCC as a collective entity offer significant potential for cooperation across different sectors? How do the two sides converge on addressing present and future challenges?   

Gulf Cooperation Council (GCC) 

The Cooperation Council for the Arab Gulf States, often called the Gulf Cooperation Council (GCC), is one of the most important regional organisations in the Gulf and the wider Middle East region. The six member states of the GCC, namely Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE, came together in 1981 to form the regional grouping in the light of the tumultuous politics at the time to develop collective mechanisms to deal with political, security and economic challenges facing the member states.

Over the years, the core focus area of the GCC has evolved, and at times, they have developed serious differences among themselves, as was evident during the Qatar crisis in 2017-21. Nonetheless, the grouping arguably is the only successful regional organisation in the Middle East. While differences over political and security goals and strategies remain, the GCC countries have stronger economic cooperation. Over the past decade, they have strengthened collaboration to develop a common market and monetary union and launched several joint connectivity and infrastructure projects.

The GCC countries have been working towards developing partnerships with important global economies and have organised summit meetings with the United States, China, Japan, South Korea, Central Asia, and the Association of Southeast Asian Nations (ASEAN) to enhance economic cooperation. These summits have come against the backdrop of the GCC countries prioritising economic reforms in preparation for a post-oil economy, and the process has accelerated since the Arab Spring and COVID-19.

First India-GCC summit

The first India-GCC Joint Ministerial Meeting for Strategic Dialogue holds significance as India and GCC have gradually been working towards enhancing their economic partnership to expand trade, investments, energy cooperation, infrastructure development, connectivity, food security and healthcare.

The meeting was co-chaired by External Affairs Minister S. Jaishankar and President of the GCC Ministerial Council, the Prime Minister and Foreign Minister of Qatar Mohammed bin Abdulrahman bin Jassim Al Thani and was attended by foreign ministers of all the GCC states.

The talks focused on developing the existing India-GCC ties to leverage the strengths of the respective economies for a prosperous and stable future for the people of India and the GCC countries.

A decision was taken to have a Joint Action Plan 2024-2028 for “undertaking various joint activities in diverse areas including health, trade, security, agriculture and food security, transportation, energy, culture, amongst others”, with an option for adding more areas with mutual consent.

Building on the existing ties

The summit meeting was also important because it focused on building upon the robust India-GCC ties with trade, business, and investments, energy and food security, defence, military and counterterrorism, and people-to-people contacts, forming the core of bilateral relations.

The GCC countries are home to one of the largest expatriate Indian communities in the world, estimated at 8.5 million, and this is the largest concentration of its citizens outside India. Over the years, people across India have found gainful employment in the dynamic and flourishing GCC economies. They are the largest contributors to the nearly US$120 billion in remittances received in India in 2023.

The GCC is also one of the largest trading blocs of India’s foreign trade. For example, in 2023-24, the bilateral trade between India and GCC was US$161.82 billion comprising 14.22 percent of India’s total foreign trade. Although the trade balance is in the GCC’s favour, this is mainly because of the large volumes of oil and gas India imports from the GCC countries. For example, of the total imports of US$105.49 billion in 2023-24, US$61.35 billion or 58 percent of the imports from the GCC were oil and gas.

The figures underline the significance of the GCC in India’s energy security. For decades, the GCC countries have been at the forefront of energy supplies to India and until recently, nearly 50-60 percent of India’s hydrocarbon imports came from the GCC states. As India is working to diversify its energy basket and suppliers as a safeguard mechanism from political and security disruptions, the contribution of GCC in oil and gas supplies has come down to 28 percent in 2023-24. However, this has not reduced the significance of the bloc in India’s energy security, as Saudi Arabia, UAE, Qatar and Kuwait remain among India’s top 10 suppliers of crude oil and gas.

Besides, the GCC countries have been one of India’s most important sources of foreign direct investments (FDI). Hence, between April 2000 and June 2024, India received a collective FDI of US$24.66 billion from the GCC countries, excluding significant portfolio investments. Many mega GCC companies such as ARAMCO, ADNOC, EMAAR and others have invested in various sectors of the Indian economy.

The business relations do not flow only one way, and increasingly, many Indian companies and businesses have established themselves as leading investors, service providers and market leaders in different sectors of the GCC economy. For example, the Lulu Hypermarket chain is one of the leading businesses in the retail industry. Similarly, Indian businesses such as TCS, Wipro, Larsen & Toubro, and Shapoorji-Pallonji have made a mark in their respective sectors.

India-GCC Free Trade Agreement

The talks on an India-GCC free trade agreement (FTA) have gained momentum in recent years, especially after the signing of the India-UAE Comprehensive Economic Partnership Agreement (CEPA). The initial framework agreement for an FTA was signed in 2004, and two rounds of negotiations were held in 2006 and 2008. 

As the region faced serious political challenges in the wake of the Arab Spring in 2010-11, the discussions on the FTA could not be continued. The intention to revive the India-GCC FTA was announced in November 2022, and discussions started among officials to find ways to sign the FTA subsequently. However, the discussions have yet to materialise, and an FTA has yet to be signed, although the intent on both sides remains as the talks continue.

Security and defence ties

Besides trade and commercial ties, India and GCC have enhanced their defence and security cooperation on counterterrorism, maritime and coastal security with joint exercises between different arms of the respective militaries and training forming the core of bilateral defence cooperation. 

In recent years, India has been working closely with GCC countries, especially the UAE and Saudi Arabia, to enhance defence trade, including possible joint manufacturing, given the expanding defence market in the Middle East and North Africa.

Growing strategic convergence

The GCC is one of the most important regional blocs in the Middle East. Despite internal differences, the grouping has worked together to develop an economic union for growth and development and to face the challenges emerging from the changing global economic and political dynamics. As the world grapples with the shifts in the international order with the economic and financial nerve centre shifting to Asia, the GCC countries have also begun to focus on developing partnerships with the growing Asian economies.

India’s economic growth and potential make it a natural attraction for the GCC countries.

Besides mutual economic attraction, there are convergences in finding solutions to emerging challenges such as fighting climate change and reducing carbon emissions, developing clean and renewable energy sources, food and health security, digital economy, AI and machine learning, and space exploration. Given the extended neighbourhood, many of the present and future challenges facing India and GCC can be faced jointly, and this has increased strategic convergence between them.

The strategic convergence also emerges from the changing international order and the political and security developments in the respective regions and different parts of the world. The wars in Ukraine and Gaza, proxy-fighting between Iran and Israel, tensions in the South China Sea and Taiwan Strait and instability in the Af-Pak region make the need for greater cooperation between India and GCC even more important.

Thus, it can be summed up by saying that India and GCC ties have evolved from focusing mainly on energy security, bilateral trade and the presence of Indian expatriates in the region. Today, India and GCC countries are looking to develop a partnership to work together to face the present and future challenges. 

Economic prosperity, land and maritime security, territorial integrity, food, health and climate security, cultural cooperation and harnessing technological advancements for the betterment of the people are among the core areas that bring India and GCC closer, as discussed during the first India-GCC Joint Ministerial Meeting in Riyadh. These strategic convergences are at the forefront of the growing India-GCC ties.

Post Read Questions

During the first India-GCC Joint Ministerial Meeting for Strategic Dialogue, the two sides stressed on the significance of enhancing cooperation across various sectors. Comment.  

India-GCC ties have evolved beyond energy security and bilateral trade. Discuss the new areas of collaboration to address present and future challenges?

How are shifts in the international order, with the economic and financial focus moving to Asia, influencing the GCC countries’ efforts to develop partnerships with growing Asian economies like India?

Evaluate the core areas of strategic convergence that bring India and the GCC closer?

(The author is Associate Professor of Middle East studies in Jawaharlal Nehru University, New Delhi. Views are personal. @MuddassirQuamar)

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