Gulf Emerges as India's Most Important Strategic Partner

The GCC, as of today, is India's largest trading bloc, overtaking the European Union, ASEAN, and even top bilateral partners like the United States and China.

- ABHINANDAN MISHRA

When BJP under Prime Minister Narendra Modi took office in May 2014, some foreign policy observers—both domestic and international—warned that India's traditionally close ties with the Gulf nations might fray under a government led by a "Hindutva"-oriented political party. The assumption was that ideological divergence, particularly with Islamic monarchies, would inhibit strategic cooperation. A decade later, that prediction has been soundly disproven.

The Gulf Cooperation Council (GCC), as of today, is India's largest trading bloc, overtaking the European Union, ASEAN, and even top bilateral partners like the United States and China. In FY 2023-24, India's total bilateral trade with the GCC reached an estimated USD 162 billion, surpassing ASEAN (USD 110 billion), the EU (USD 130-140 billion), and the US (USD 118 billion). This makes the GCC India's largest regional trading partner for the second consecutive year, a position it first attained in FY 2022-23. Back in FY 2013-14, the total India-GCC trade stood at approximately USD 120 billion, meaning the trade volume has grown by over 35% in a decade. The UAE alone accounted for USD 84 billion in bilateral trade, while Saudi Arabia contributed over USD 43 billion.

A major turning point came in April 2022, when India signed the Comprehensive Economic Partnership Agreement (CEPA) with the UAE. Within the first 12 months of implementation, Indian exports to the UAE surged by 12%, and the number of tariff-free product lines expanded to over 80%. Since the signing of CEPA, bilateral merchandise trade has nearly doubled from USD 43.3 billion in FY 2020-21 to USD 83.7 billion in 2023-24. A similar agreement with Oman, expected to eliminate duties on USD 3 billion worth of Indian exports, is in final stages.