India-GCC FTA (Feb 2026): What Gulf Businesses Should Prepare

India-GCC FTA Negotiations: What Happened in February 2026

On February 24, 2026, India and the Gulf Cooperation Council formally launched free trade agreement negotiations in New Delhi. GCC Secretary General Jasem Mohamed Albudaiwi and India's Commerce and Industry Minister Piyush Goyal signed a Joint Statement marking the official start of negotiations. This followed the signing of the Terms of Reference (ToR) on February 5, 2026, which established the framework for comprehensive discussions.

The launch represents a restart after a 15-year hiatus — the previous round of India-GCC FTA talks was suspended in 2011. The intervening period saw India successfully conclude bilateral agreements with the UAE (CEPA, May 2022) and Oman (CEPA, December 2025), which together provide a template for the broader bloc-level agreement.

For Gulf businesses — from Emirati conglomerates to Saudi sovereign wealth fund-backed enterprises and Qatari energy companies — this agreement will reshape the terms of engagement with India, the world's fifth-largest economy and a market of 1.4 billion consumers.

The India-GCC Trade Relationship: By the Numbers

The GCC is India's largest trading partner as a bloc. Understanding the scale helps contextualize why this FTA matters:

The trade relationship is heavily weighted toward energy. GCC countries supply over 60% of India's crude oil and 70% of its natural gas import requirements. However, the non-oil trade component has been growing steadily, with sectors like gems and jewelry, textiles, food products, chemicals, and engineering goods driving diversification.

India has concluded a 20-year gas import agreement with Qatar valued at USD 78 billion, while Saudi Arabia and the UAE have pledged USD 100 billion and USD 70 billion respectively in investment into India's infrastructure and energy sectors.

What the FTA Will Cover: Negotiating Framework

Based on the Terms of Reference signed on February 5, 2026, and the Joint Statement of February 24, 2026, the India-GCC FTA negotiations will cover:

Trade in Goods

Tariff reduction and elimination across product categories. Key sectors expected to be central to discussions include:

• Petrochemicals: Reduced tariffs on refined petroleum products, plastics, and chemical intermediates
• Food processing: Market access for Indian food exports including cereals, spices, marine products, and processed foods
• Infrastructure materials: Steel, cement, construction materials, and related products
• ICT products: Electronics, IT hardware, and telecommunications equipment
• Textiles and apparel: India's labor-intensive exports seeking improved access
• Pharmaceuticals: Indian generic medicines and medical devices

Companies importing goods from GCC countries into India should review current tariff rates and model potential cost reductions under an FTA scenario. Understanding India's GST framework is essential, as GST applies on imported goods regardless of FTA tariff preferences.

Trade in Services

Services liberalization is expected to be a significant component, particularly:

• Financial services: Greater market access for GCC banks and financial institutions in India, and Indian financial firms in GCC markets
• Construction and infrastructure: Streamlined provisions for Gulf construction companies bidding on Indian infrastructure projects
• IT and digital services: Cross-border service delivery frameworks for India's IT sector serving GCC clients
• Healthcare: Provisions for medical tourism and healthcare services trade
• Professional services: Accounting, legal, engineering, and consulting services market access

Customs Procedures and Trade Facilitation

Simplified customs documentation, advance rulings, and digital trade facilitation measures to reduce clearance times and costs.

Digital Trade

E-commerce facilitation, digital payments interoperability, and data governance frameworks for cross-border digital commerce.

Intellectual Property Rights

Patent protection, trademark enforcement, and geographical indications provisions relevant to both sides' export interests.

SPS and TBT Measures

Sanitary and phytosanitary standards alignment and technical barriers to trade reduction, particularly important for food and agricultural trade.

SME Cooperation

Provisions to enhance market access and trade opportunities for micro, small, and medium enterprises from both sides.

The India-UAE CEPA Precedent: What It Tells Us

The India-UAE CEPA, in force since May 2022, provides the strongest indicator of what a broader India-GCC FTA might deliver. The results have been striking:

• Bilateral merchandise trade nearly doubled from USD 43.3 billion (FY2020-21) to USD 83.7 billion (FY2023-24), crossing USD 100 billion in FY2024-25
• The UAE eliminated duties on 97.4% of tariff lines covering 99% of Indian imports by value
• Gems and jewelry bilateral trade surged 35% to USD 28.15 billion
• Over 54,000 preferential Certificates of Origin were issued in the first 11 months
• India offered market access on 100 services subsectors; UAE offered 111

Gulf businesses that have already benefited from the UAE CEPA should expect the GCC FTA to extend similar provisions — potentially with broader coverage — across Saudi Arabia, Kuwait, Qatar, Bahrain, and the existing UAE and Oman frameworks.

For UAE-based companies already investing in India, understanding the FEMA compliance framework and FDI advisory requirements is critical. Our UAE country guide covers entity registration in detail.

Key Sectors for Gulf Businesses

Energy and Petrochemicals

The GCC's core comparative advantage lies in energy and petrochemicals. India imports over USD 120 billion in petroleum and energy products from GCC countries annually. The FTA could reduce tariffs on refined petroleum products, specialty chemicals, and petrochemical intermediates, improving price competitiveness for GCC exporters.

Simultaneously, the green energy transition creates new opportunities. India targets 500 GW of renewable energy capacity by 2030, and GCC countries — particularly the UAE and Saudi Arabia — are investing heavily in green hydrogen, solar energy, and sustainable technologies. The FTA is expected to facilitate these cross-border energy investments.

Real Estate and Infrastructure

Gulf sovereign wealth funds and real estate developers have significantly increased their India exposure. Saudi Arabia's Public Investment Fund (PIF), Abu Dhabi's Mubadala and ADIA, and Qatar Investment Authority have all made substantial allocations to Indian infrastructure, real estate, and technology companies.

The FTA's investment protection provisions and services liberalization could reduce barriers for GCC construction and infrastructure companies bidding on Indian government contracts and PPP projects. Companies should understand India's FDI regulations for the construction development sector, which currently permits 100% FDI under the automatic route subject to specific conditions.

Food Processing and Agriculture

India is a major food exporter to GCC countries, particularly cereals, spices, marine products, and processed foods. GCC food security strategies — especially post-2020 — have prioritized diversified supply chains, with India as a key source.

The FTA is expected to reduce tariffs and streamline SPS procedures for Indian food exports while also improving market access for GCC dates, seafood, and other agricultural products in India. Indian Import Export Code (IEC) holders serving GCC markets should monitor tariff negotiations closely.

Financial Services and Fintech

GCC financial institutions have been expanding into India, while Indian banks have established presence across Gulf countries. The FTA's services chapter is expected to enhance market access for:

• GCC banks seeking Indian banking licenses or branch permissions
• Islamic finance products in India's growing market
• Fintech companies facilitating India-GCC remittances and payments
• Insurance companies seeking cross-border market access

India's remittance flows from GCC countries remain substantial — 38% of India's total inward remittances (approximately USD 45 billion) came from GCC countries in FY2023-24, even as advanced economies have overtaken the Gulf as the primary remittance source.

Healthcare and Pharmaceuticals

India's pharmaceutical industry — the world's largest generic drug supplier — already serves GCC markets extensively. The FTA could strengthen provisions for Indian pharmaceutical exports, medical device trade, and healthcare services including medical tourism flows in both directions.

Contentious Issues and Challenges

Several issues are expected to be contentious during negotiations:

Agriculture

India is likely to resist broad agricultural market opening, particularly for products where domestic farmer interests are politically sensitive. GCC negotiators will push for better access for dates, seafood, and processed food products.

Labour Mobility

With approximately 9 million Indians living in GCC countries, labor mobility provisions will be closely scrutinized. Gulf countries are undergoing labor market transformation with "nationalization" programs (Saudization, Emiratisation, Omanisation) prioritizing local workers. India will push for protections for existing workers and skilled migration pathways, while GCC countries will seek flexibility in managing their labor markets.

Services Liberalization

India traditionally takes a cautious approach to services liberalization in FTA negotiations. GCC countries will push for greater access to India's financial services, real estate, and retail markets. India will seek reciprocal access for IT services, professional services, and healthcare.

Investment Protection

Investment protection clauses — including investor-state dispute settlement mechanisms — are likely to be negotiated carefully, with both sides seeking to protect sovereign regulatory space while providing investor certainty. Companies should understand India's government approval route for FDI in sensitive sectors.

Timeline: What to Expect

The first round of formal negotiations was initially expected in early 2026, but the West Asia conflict has pushed substantive talks to the second half of 2026. Based on India's recent FTA track record and the complexity of negotiating with a six-country bloc:

1. H2 2026: First formal negotiating round — tariff offers exchanged, services schedules discussed
2. 2027: Multiple negotiating rounds on goods, services, investment, and digital trade
3. 2027-2028: Potential conclusion of negotiations, subject to political dynamics
4. 2028-2029: Ratification and entry into force

Gulf businesses should not wait for the final agreement. The India-UAE CEPA and India-Oman CEPA already provide preferential access that can be leveraged now, while monitoring GCC-level negotiations for broader opportunities.

Practical Steps for Gulf Businesses

1. Audit Your India Trade Flows

Map all goods and services flows between your operations and India. Identify products currently subject to tariffs that could benefit from FTA preferences. Calculate the potential cost impact of tariff reductions across your product portfolio.

2. Leverage Existing Bilateral Agreements

The India-UAE CEPA and India-Oman CEPA are already in force. If you are based in the UAE or Oman, you may already qualify for preferential tariff rates. Ensure you are obtaining Certificates of Origin and claiming applicable preferences.

3. Evaluate India Market Entry

If you are considering establishing an India presence, begin the process now rather than waiting for the GCC FTA. Entity registration takes 4-8 weeks, and compliance obligations begin immediately. Options include a private limited company, wholly owned subsidiary, or LLP. Our branch office vs subsidiary comparison helps evaluate the right structure.

4. Prepare for Compliance Requirements

India's regulatory framework requires careful navigation. Key compliance areas include:

• FC-GPR filings for foreign investment
• Annual FLA returns to the RBI
• GST registration and compliance
• Transfer pricing documentation for intercompany transactions
• Annual statutory compliance including ROC filings

5. Engage Trade Bodies

Provide input to your national chamber of commerce and the Federation of GCC Chambers on sectors and provisions most important to your business. Industry consultations shape FTA outcomes — the negotiation window is the time to influence terms.

6. Monitor DTAA Benefits

India has bilateral DTAAs with most GCC countries, providing reduced withholding tax rates on dividends, interest, and royalties. These tax treaty benefits operate independently of the FTA and should be optimized in parallel. Companies should ensure they have valid Tax Residency Certificates to claim DTAA benefits.

Key Takeaways

• India-GCC FTA negotiations formally launched February 24, 2026 after a 15-year hiatus. The GCC is India's largest trading partner bloc at USD 178.56 billion in annual trade.
• Key sectors for Gulf businesses: energy and petrochemicals, real estate and infrastructure, food processing, financial services, and pharmaceuticals will be central to negotiations.
• The India-UAE CEPA provides the template: bilateral trade nearly doubled after the agreement entered force. Gulf businesses can expect similar benefits from the broader GCC FTA.
• First formal negotiating round expected H2 2026, with conclusion potentially in 2027-2028. The West Asia conflict has delayed initial timelines.
• Do not wait for the GCC FTA. The India-UAE CEPA and India-Oman CEPA are already operational. Businesses from these countries should be claiming preferential tariff rates now while monitoring the broader negotiations.