GCC is the largest trading partner bloc for India

India and the Gulf Cooperation Council (GCC) re-emphasised the willingness to launch Free Trade Agreement (FTA) negotiations last week. The GCC established in 1981, consisting of six member states, is the most powerful block in the Arabian geo-economic map. Commerce Minister Piyush Goyal and Dr Nayef Falah M. Al-Hajraf, Secretary General of GCC, held a joint press conference in New Delhi to announce the resumption of FTA negotiations.

The Commerce Ministry said: “FTA is envisaged to be a modern, comprehensive agreement with substantial coverage of goods and services. Both sides emphasized that the FTA will create new jobs, raise living standards, and provide wider social and economic opportunities in India and all the GCC countries. Both sides agreed to significantly expand and diversify the trade basket in line with the enormous potential that exists on account of the complementary business and economic ecosystems of India and the GCC.”

It may be noted that GCC is the largest trading partner bloc for India. India had earlier walked out of Regional Comprehensive Economic Partnership (RCEP) agreement in 2020. RCEP is one of the largest trading blocs created by an agreement between 15 countries of the Indo Pacific except for India. The flaring relationship with China, including a couple of military clashes, forced India to walk out of the agreement two years ago, as it feared that the Indian market could become a dumping group for China aided or China manufactured goods.

Taken together with a near certain slowing down of the Chinese economy, there might be a rush to send as much stuff to large economies as India to balance out the domestic turmoil. However, it may be worthwhile noting that South Korea, Japan, and Australia, despite having severe geopolitical clashes with China, had decided to join the RCEP. Albeit it may be argued that they had joined the agreement in 2020, when the bilateral relations with China and overall global outlook on China had not taken a dent, as it has now.

The doors remain open for India to look at some sort of special interest agreement with RCEP as some influential members of the body such as Japan, think it is important to have India at the table.

India is also trying to negotiate a trade agreement with the European Union. This week members of the EU were in India for the third round of negotiations leading to a potential FTA. However, many experts are skeptical of an early timeline for trade agreement negotiations with the EU, given the gamut of issues on both sides. Meanwhile, the India-UK trade deal has hit a roadblock after nearly reaching the finishing line in October this year. The UK-India trade agreement is being closely watched out as it could set a template for future trade negotiations with the western economic blocs.

India has done well to steer towards a trade friendly policy regime especially in the digital domain, a key factor for new age trade agreements. The recently released draft on Digital Personal Data Protection Bill, allows free flow of data with “trusted geographies”, which will be identified by the government in future. This is a clear indicator that India will keep its options open for digital trade related issues in future negotiations. It may also feature in the India-GCC trade agreement, which needs to commence soon. In 2022, the Indian government did well by quickly concluding bilateral trade agreements with two economically significant nations, the UAE and Australia.

In the last month of the current year, the hope is that the momentum for concluding trade deals continues through 2023.

(The author is a foreign affairs commentator)