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In News
- Recently, India and the Gulf Cooperation Council (GCC) have decided to pursue resumption of Free Trade Agreement (FTA) negotiations.
- Earlier attempts were made in 2006 and 2008 but were not successful.
What is a Free Trade Agreement (FTA)?
- A free trade agreement is a pact between two or more nations to reduce barriers to imports and exports among them.
- Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
- The concept of free trade is the opposite of trade protectionism or economic isolationism.
Gulf Cooperation Council (GCC)
- The GCC comprises:
- Saudi Arabia
- UAE
- Qatar
- Kuwait
- Oman
- Bahrain
- GCC is currently India’s largest trading partner bloc with bilateral merchandise trade valued at over 154 billion US dollars in the financial year 2021-22.
- Bilateral trade in services between India and the GCC was worth 14 billion US dollars.
- GCC countries contribute almost 35 per cent of India’s oil imports and 70 percent of gas imports.
- India’s overall crude oil imports from the GCC in 2021-22 were about $48 billion, while LNG and LPG imports in 2021- 22 stood at about $21 billion.
- India’s exports to the GCC member countries grew by over 58% to about $44 billion in 2021-22 against nearly $28 billion in 2020-21.
Pending and successful FTA with India
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Significance of the India and GCC FTA
- Trade potential: The GCC region holds huge trade potential and a trade agreement would help in further boosting India’s exports to that market.
- Oil and gas reserves: The GCC’s substantial oil and gas reserves are of utmost importance for India’s energy needs.
- Good relations: India shares good relations with most of the countries in the Gulf.
- India can increase its exports: GCC is a major import dependent region. India can increase its exports of food items, clothing and several other goods.
- Duty concessions under a trade agreement will help in tapping that market.
- India needs to develop a cohesive approach to develop ties in diverse areas such as renewables, water conservation, food security, digital technology and skills development.
Source: PIB
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