India and the Gulf Cooperation Council (GCC) formally launched negotiations for a Free Trade Agreement (FTA) with the signing of the Terms of Reference (ToR) in New Delhi on Wednesday, a move being viewed not merely as a bilateral trade step but as a strategic pillar in the emerging India–Middle East–Europe Economic Corridor (IMEC).

The ToR was signed at Vanijya Bhawan by Ajay Bhadoo, Additional Secretary and Chief Negotiator, Department of Commerce, and Dr. Raja Al Marzouqi, Chief Negotiator from the GCC Secretariat General. The ceremony was held in the presence of Union Commerce and Industry Minister Piyush Goyal, Minister of State Jitin Prasada, and Commerce Secretary Rajesh Agrawal.

The document outlines the scope and modalities that will guide negotiations for the proposed India–GCC FTA, formally commencing talks toward what both sides described as a mutually beneficial agreement.

Addressing the gathering, Goyal said the FTA would act as a “force multiplier for the global good,” bringing greater predictability and stability to bilateral trade. He expressed confidence that the agreement would enable the seamless flow of goods and services, attract investments, expand employment opportunities, and strengthen food and energy security across the region.

Dr Al Marzouqi highlighted the longstanding and historic trade relations between India and the GCC countries, noting that the signing of the ToR marks the official beginning of negotiations. He emphasized that an FTA would further reinforce economic relations, particularly at a time of prevailing global uncertainties.

During his visit, Dr Al Marzouqi also met Commerce Secretary Rajesh Agrawal to discuss advancing cooperation across areas of mutual interest and strengthening the broader economic partnership.

Strategic stakes

The proposed agreement carries substantial economic weight. India’s trade with the GCC stood at $178.56 billion in FY 2024–25 — comprising exports of $56.87 billion and imports of $121.68 billion — accounting for 15.42% of India’s total global trade. Over the past five years, bilateral trade has grown at an average annual rate of 15.3%.

India’s key exports to the GCC include engineering goods, rice, textiles, machinery, and gems and jewellery. Imports from the bloc are dominated by crude oil, liquefied natural gas (LNG), petrochemicals, and precious metals such as gold.

Collectively, the GCC represents a market of 61.5 million people with a combined GDP of approximately $2.3 trillion in 2024, ranking ninth globally. The region is also a significant source of foreign direct investment for India, with cumulative investments exceeding $31.14 billion as of September 2025.

Nearly ten million Indians reside in GCC countries, reinforcing strong people-to-people ties alongside the substantial presence of Indian companies across the region.

IMEC’s final link

Beyond trade numbers, analysts argue that the FTA negotiations are strategically central to the success of IMEC.

In a LinkedIn post, Shailesh Singh Gaharwar, Research Analyst & Independent Writer on Geopolitics, Trade and Infrastructure, wrote:

“While global headlines remain fixated on the volatility of the Red Sea shipping route and escalating regional conflicts, a tectonic shift in the world’s trade architecture is being quietly engineered. The India-Middle East-Europe Economic Corridor (IMEC) is no longer just a conceptual map; it is an emerging ‘triangular trade’ framework—linking India, the Gulf Cooperation Council (GCC), and the European Union—designed to bypass current geopolitical bottlenecks.

The central premise of this geo-economic strategy is simple but profound: the physical infrastructure of rails and ports cannot function without a unified diplomatic foundation. The recently launched India-GCC Free Trade Agreement (FTA) negotiations represent the final, indispensable link in this chain. Far from a routine trade deal, these talks are the catalyst required to transform the IMEC from a vision into a functional global reality.”

He further noted that the IMEC architecture rests on three geographic and economic pillars — India, the GCC, and the EU — with strategic and financial support from the United States, describing it as a “triangular trade” framework.

Referring to the ToR signing, he wrote: “To turn IMEC into reality, India has taken a very big initiative... preparations for a mega deal with the Gulf countries have begun. FTA talks have started... if you look at it, IMEC has three links. It is also called the triangular trade, including India, the GCC, EU, and supported by the US from outside.”

Gaharwar also pointed to the economic imbalance in current trade flows, noting that while bilateral trade stands at $178 billion, India imports roughly $120 billion, primarily comprising energy, and exports around $60 billion. He opined that a unified FTA would help move away from “fragmented bilateral rules” and enable unified customs duties across Gulf territories — a structural requirement for corridor efficiency.

On the logistics dimension, he highlighted IMEC’s ambition to cut transit time by 40% and logistics costs by 30% compared to traditional routes, positioning it as a rules-based alternative to the Red Sea route and a counter to China’s Belt and Road Initiative (BRI).

He also emphasized the digital dimension of the corridor, stating that this infrastructure is the engine for Next-Generation AI. "By utilizing tax breaks introduced in the recent Indian budget, the government is positioning India to become the 'Data Hub' for the Gulf and Europe. This ensures the corridor facilitates not just the trade of goods, but the massive data flows required for the future of technology and financial services," he adds.

In his conclusion, Gaharwar described the broader alignment of India, GCC, EU, and the US as a “fundamental restructuring of the global economic order. "Will the successful implementation of this unified market of billions finally shift the global economic center of gravity permanently toward this new corridor?" he questions.