India and the Gulf Cooperation Council (GCC) Explained

India and the GCC share one of the most important economic and strategic relationships in the wider Asian region, because the six-member Gulf Cooperation Council (Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman and Bahrain) is among India’s largest trading partners, a leading supplier of crude oil and liquefied natural gas, and the home of the largest overseas Indian community. The ties are rooted in centuries of maritime trade across the Arabian Sea and have grown into energy, investment, labour and security partnerships.

This explainer describes what the GCC is, why it matters to India, how trade, energy, remittances and food security are linked, where the proposed India-GCC free trade agreement stands and what the strategic dimension involves. Figures are given as broad, qualitative ranges, since trade and remittance numbers change each year.

Key Takeaways

• The Gulf Cooperation Council is a regional bloc of six states, Saudi Arabia, the UAE, Qatar, Kuwait, Oman and Bahrain, founded in 1981 and headquartered in Riyadh.
• The GCC is one of India’s largest trading partners, with annual trade worth well over one hundred billion US dollars.
• Around nine million Indians live and work in the GCC countries, forming the largest overseas Indian community in any region of the world.
• The GCC supplies India with a large share of its crude oil and most of its LNG, with Qatar a leading LNG supplier.
• India and the GCC signed a framework agreement on economic cooperation in 2004 and have discussed a free trade agreement, but a bloc-wide deal has not yet been concluded.
• India’s strategic ties with Gulf states now include defence exercises, counter-terrorism cooperation, investment partnerships and the India-Middle East-Europe Economic Corridor.

What is the Gulf Cooperation Council (GCC)?

The Gulf Cooperation Council (GCC) is a political and economic union of six Arab states on the Arabian Peninsula: Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman and Bahrain. It was established in May 1981 in Abu Dhabi, and its secretariat is located in Riyadh.

The member states share a similar political structure, mostly monarchies, a common language and heritage, and economies built on hydrocarbons. The bloc has worked towards economic integration through a customs union, a common market framework and coordinated policies on trade and security.

For India, the GCC is both a collection of individual partners and a regional bloc. Most of the practical cooperation is bilateral with each country, but the bloc is important in discussions on trade and regional stability.

Why is the GCC important to India?

The GCC is important to India because it combines energy supply, trade, jobs for millions of Indians, remittances, investment and strategic location in one neighbouring region. Few other regions touch so many parts of India’s economy at once.

• Energy security: a large share of India’s crude oil, LPG and LNG imports comes from the Gulf.
• Trade: the Gulf is a major market for Indian exports such as food, engineering goods, textiles, gems and jewellery, and refined products.
• People: millions of Indians work there, and their remittances support households across Kerala, Uttar Pradesh, Bihar, Tamil Nadu, Telangana and other states.
• Investment: Gulf sovereign wealth funds and companies invest in Indian infrastructure, energy and technology.
• Location: the Gulf sits along vital sea lanes linking India to Europe, Africa and the Suez Canal route.

Proximity also means that events in the Gulf, such as conflict or oil price shocks, directly affect India’s economy and the safety of its nationals.

How large is India-GCC trade?

India-GCC trade is worth well over one hundred billion US dollars a year, making the GCC one of India’s largest trading blocs, comparable in importance to major individual partners. The United Arab Emirates and Saudi Arabia account for the largest shares among the six members.

India has traditionally run a trade deficit with the region because of its heavy oil and gas imports, though the deficit narrows when oil prices fall. The UAE is also a major re-export hub, which means that some Indian exports pass through Dubai and other Emirati ports on their way to other markets.

How important are crude oil and LNG from the GCC for India?

Crude oil and LNG from the GCC are very important to India because India imports most of its crude oil and a large part of its natural gas, and the Gulf is among the largest sources of both. Saudi Arabia, the UAE and Kuwait have long been leading crude suppliers, while Qatar is one of India’s biggest LNG suppliers under long-term contracts.

Gulf suppliers also provide LPG, which is widely used for cooking in Indian households. The proximity of the Gulf means shorter shipping routes and lower transport costs than supplies from more distant regions.

India has diversified its energy sources in recent years by buying from other regions, but the Gulf continues to be central. Gulf energy firms also cooperate with India on storage: the Abu Dhabi National Oil Company has stored crude in India’s strategic petroleum reserve at Mangaluru, which gives India a buffer in an emergency.

Why does the GCC host so many Indians, and how large are remittances?

The GCC hosts so many Indians because its economies, built on oil wealth, have large construction, services, healthcare, retail and engineering sectors that rely heavily on migrant labour. The Indian diaspora in the six countries is estimated at around nine million people, the largest overseas Indian community in any region.

Indians in the Gulf work across the spectrum, from construction workers and drivers to engineers, doctors, bankers and business owners. Indians are the largest expatriate group in countries such as the UAE and are a substantial share in Saudi Arabia, Kuwait, Qatar, Oman and Bahrain.

Remittances from the Gulf are a major source of foreign exchange for India and a lifeline for many families. Historically, the Gulf has accounted for a very large share of India’s inward remittances, though the share has fallen somewhat as more money now arrives from advanced economies. States such as Kerala, in particular, rely strongly on Gulf-linked incomes.

Issues affecting Indian workers

• Labour sponsorship systems, often called the kafala system in some countries, which tie workers to employers.
• Nationalisation policies such as Saudization and Emiratisation that reserve some jobs for citizens.
• Recruitment malpractice, wage disputes and the need for consular support.
• Safety and heat exposure for outdoor workers.

India addresses these through its embassies, welfare funds, labour agreements and online emigration platforms.

How are food security and investment linked between India and the Gulf?

Food security and investment are linked between India and the Gulf because the Gulf states import most of their food and look to India as a reliable supplier, while India seeks Gulf capital for agriculture, logistics and infrastructure. India exports rice, wheat products, spices, fruits, vegetables, meat and sugar to the region.

Gulf governments and funds have discussed or made investments in Indian food parks, cold chains, ports and agricultural projects, a pattern encouraged by groupings such as I2U2 (India, Israel, the UAE and the United States). In return, Indian farmers and processors gain a large, stable market.

Gulf sovereign wealth funds are also significant investors in Indian infrastructure, renewable energy, digital platforms and start-ups. Financial connectivity has also improved through the linking of payment systems and local-currency settlement arrangements with the UAE.

What is the proposed India-GCC free trade agreement?

The proposed India-GCC free trade agreement is a planned trade pact between India and the six GCC members that would reduce tariffs and ease trade in goods and services. India and the GCC signed a framework agreement on economic cooperation in 2004, and negotiations on a free trade agreement began soon after.

Talks slowed and were paused for several years, and both sides later expressed interest in restarting them. A bloc-wide agreement has not yet been concluded, partly because the six members have different economic priorities and the Gulf states handle some trade matters through their own bilateral channels.

In the meantime, India has pursued bilateral arrangements. The India-UAE Comprehensive Economic Partnership Agreement came into force in May 2022 and is the clearest example, and India has held trade discussions with other Gulf states. These bilateral deals could eventually form building blocks for a wider India-GCC agreement.

What is the strategic and security dimension of India-GCC ties?

The strategic and security dimension of India-GCC ties covers defence exercises, maritime security, counter-terrorism, intelligence sharing and the protection of sea lanes. India has strategic partnerships with several Gulf states, including the UAE and Saudi Arabia, and close defence ties with Oman.

• Defence exercises: India holds bilateral naval, air and army exercises with Gulf partners, including Oman, the UAE and Saudi Arabia.
• Maritime security: Indian Navy ships operate in the Arabian Sea and the Gulf of Aden, protecting shipping and cooperating with regional navies.
• Counter-terrorism: intelligence and law-enforcement cooperation, including extradition and action against financing of terror.
• Evacuation capability: India has repeatedly evacuated its citizens from the Gulf during crises, including the 1990 airlift from Kuwait, one of the largest civilian evacuations in history.
• Connectivity: the India-Middle East-Europe Economic Corridor, announced at the G20 summit in New Delhi in 2023, envisages rail and shipping links through the Gulf.

India follows a policy of balance in the region. It maintains good relations with all GCC members as well as with other regional states, and it avoids taking sides in disputes between them.

What challenges could affect India-GCC relations?

Challenges that could affect India-GCC relations include energy transition, regional instability, workforce nationalisation policies and slow progress on trade negotiations. Each can alter the pattern of cooperation without necessarily weakening it.

• Energy transition: as India expands renewable energy and the Gulf diversifies away from oil, the basis of the trade relationship will shift towards green hydrogen, solar power and technology.
• Regional tensions: conflict or disruption in the Gulf or at its sea routes can affect oil prices and the safety of Indian workers.
• Labour policies: changing rules on foreign workers can affect job opportunities and remittances.
• Trade negotiations: differing priorities among the six members complicate a single comprehensive agreement.

Despite these, both sides see the relationship as mutually beneficial and long-term, and many analysts expect it to broaden from energy and labour into technology, finance and manufacturing.

Bottom Line

India and the GCC are tied together by oil and gas, trade, a large diaspora and a shared interest in a stable Arabian Sea region. The relationship is shifting from a buyer-seller and labour model towards a broader partnership in investment, technology and strategic cooperation, and a future trade agreement would deepen it further.

Frequently Asked Questions

Which countries are in the GCC?

The GCC has six members: Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Oman and Bahrain. The Gulf Cooperation Council was founded in 1981 and is headquartered in Riyadh.

Why is the GCC important for India?

The GCC is important for India because it is a leading trading partner and a major source of crude oil and LNG. It is also home to around nine million Indians whose remittances support families across India.

How many Indians live in the GCC countries?

Around nine million Indians live in the GCC countries, which is the largest overseas Indian community in any region. They are found in every member state and form the biggest expatriate group in the UAE.

Is there a free trade agreement between India and the GCC?

No, a bloc-wide India-GCC free trade agreement has not yet been concluded. The two sides signed a framework agreement in 2004 and began talks, but negotiations slowed, while India has pursued bilateral pacts such as the India-UAE CEPA in force since 2022.

How much oil and gas does India import from the GCC?

India imports a large share of its crude oil and most of its LNG from the GCC region. Saudi Arabia, the UAE and Kuwait are leading oil suppliers, while Qatar is a leading source of LNG.

Does India cooperate with GCC countries on security?

Yes, India cooperates with GCC countries on defence exercises, maritime security, counter-terrorism and intelligence sharing. It has strategic partnerships with several Gulf states and holds regular exercises with Oman, the UAE and Saudi Arabia.

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