The world is experiencing uncertainty with conflict in Europe, the US-China trade war, and soaring inflation across the US, Europe, and other parts of the world. Adding to the economic uncertainty is China, which continues to reel under COVID-19, even as the world is yet to recover completely from the after-effects of the pandemic. In this scenario, India has emerged as a critical player in maintaining stability. The potency of India＊s vaccines and the success of its vaccination rollout helped our country bounce back to pre-pandemic growth levels.?
The year 2023 is crucial for India. This is the year India presides over the G20 and sets the agenda for inclusive development through the theme of Vasudhaiva Kutumbakam 每 The World is one Family 每 One Earth, One Family, One Future.
Over the past few years, India has taken great strides in institutionalising global trade partnerships with countries. Negotiations for more Free Trade Agreements (FTAs) are underway. One can say without doubt that 2023 is going to be eventful as India will engage with four major players: the European Union, Canada, the UK, Australia, and the Gulf Cooperation Council (GCC), to forge more partnerships. The India-GCC FTA, which is in the early stages of negotiation, will attract attention because of its significance to India. The geostrategic location of the GCC, combined with its vast reserves of energy resources, would play a crucial role in the country's economic growth.?
In its FTA with the GCC, India is considering giving tariff reduction for almost 65% of the tariff lines. India is also willing to extend graded reductions across other tariff lines in the years to come. As is their nature, both sides have considerable benefits to reap from FTAs. For instance, India's exports to the UAE have jumped 13.5% to USD 15.39 billion after the India-UAE FTA was signed.?
Both sides aim to sign the India-GCC FTA by June this year. There will be a huge jump in India's exports to the six GCC countries.
The Gulf is an integral part of India＊s extended neighbourhood. Prior to 1991, India maintained distance from the Middle East largely due to the Cold War and because our country relied upon Russia (then USSR) for 15-25% of its hydrocarbon needs. After 1991, the relations between India and the Gulf region started to take shape and have solidified over the past two decades. Since then, India and the Gulf states have relished close economic and trade relations. There is now increased cooperation between the Gulf countries and the Indian subcontinent in several areas including trade, energy supplies, maritime security, and the sharing of defence and military knowledge and technology through numerous joint military exercises.
Given its geographical proximity and robust relationship with the GCC counties, India relies heavily on the region to meet its energy requirements. Currently, India gets 55 per cent of its LNG and 35 per cent of its crude oil from the Gulf. Apart from food items, India exports pearls, precious/semi-precious stones, iron and steel and chemicals to the GCC countries. During 2021-22, the value of imported goods from the six GCC states stood at USD 110.73 billion, and the export value stood at around USD 44 billion.?
According to a report by the Federation of Indian Export Organisations (FIEO), exports to the GCC states increased 44% in 2021-22. The formalization Comprehensive Economic Partnership Agreement (CEPA) with the UAE, and the establishment of Strategic Partnership Council (SPC) Agreement with Saudi Arabia have paved the way for India's growing cooperation with the GCC. While the CEPA focuses on trade, the SPC is multi-faceted and looks at expanding economic, political, cultural and defence ties.
India-GCC relations are not limited to trade and have also extended to military & security cooperation. There have been several diplomatic exchanges and visits aimed at enhancing bilateral relations between India and the bloc. In early 2022, The Commander of the Royal Saudi Land Forces, Lieutenant General Fahd Bin Abdullah Mohammed Al-Mutair, reciprocated the historic visit of the Indian Army Chief General Manoj Mukund Naravane to Saudi Arabia in December 2021.?
Upon his visit to India, Lieutenant General Fahd Bin Abdullah Mohammed Al-Mutair discussed strengthening defence ties between the two nations. India has conducted naval exercises with both UAE and Saudi Arabia.? Security has become an important tenet of cooperation between our nations. At multiple fora, the leaders of various GCC countries have highlighted the importance of maintaining regional stability in partnership with India.
The sizable Indian diaspora living in the Gulf states is another factor that furthers deepening economic cooperation. The remittances sent to India by these NRIs are significant. The Indian diaspora in the Gulf states contributes heavily to India's USD 87 billion annual overseas remittances, as per the World Bank's 2021 report. India has enormous potential to grow its trade with the Gulf region, and the FTA will help us realize some of this potential.?
Today, International trade has become the cornerstone of economic growth and progress. As India moves towards becoming an economic powerhouse, the FTAs we sign would accelerate development. India＊s FTA with GCC would be significant in speeding our country＊s growth. 2023 is crucial for India as we hold the presidency the Shanghai Cooperation Organisation (SCO). These global events 每 G20 and SCO 每 will provide a forum for India to establish and formalise cooperation with other economies.
The writer is Professor, Dean & Head, Central University of South Bihar. He teaches development communications, sustainability, and environmental studies. The views expressed in the article are author's own.?