In a significant development aimed at strengthening economic cooperation between the two nations, India and Saudi Arabia have pledged to fast-track negotiations on the India-Gulf Cooperation Council (GCC) Free Trade Agreement (FTA).
During a special briefing on the State Visit of the Crown Prince and Prime Minister of Saudi Arabia, Prince Mohammed bin Salman bin Abdulaziz Al Saud to India, Secretary of Consular, Passport and Visa Division (CPV) and Overseas Indian Affairs (OIA), Ausaf Sayeed, announced the decision. He stated, "India and Saudi Arabia have agreed to expedite the India-GCC FTA negotiations, which they believe will serve as a catalyst for enhancing economic cooperation between the two sides. They have also committed to strengthening collaboration in the FinTech sector and exploring trade in local currencies."
The Framework Agreement on Economic Cooperation between India and the Gulf Cooperation Council was initially signed on August 25, 2004. This framework paved the way for discussions on the feasibility of a Free Trade Agreement (FTA) between the parties, with negotiations commencing with the GCC.
India's trade relations with the GCC hold immense significance, with bilateral trade in FY 2021-22 valued at over USD 154 billion, consisting of exports valued at approximately USD 44 billion and imports of around USD 110 billion. Furthermore, bilateral trade in services between India and the GCC reached around USD 14 billion in FY 2021-22, featuring exports valued at USD 5.5 billion and imports at USD 8.3 billion, as per the Ministry of Commerce and Industry.
India heavily relies on the GCC for energy resources, with GCC countries contributing nearly 35% of India's oil imports and 70% of gas imports. In 2021-22, India's crude oil imports from the GCC totaled about USD 48 billion, while LNG and LPG imports for the same period amounted to about USD 21 billion. Investments from the GCC in India currently stand at over USD 18 billion.
Moreover, during the Crown Prince's visit, India and Saudi Arabia voiced their full support for the prompt implementation of the west coast refinery projects. Sayeed explained, "The two sides agreed to establish a joint task force to facilitate the identification and channeling of the 100 Billion Dollar investments promised by the Saudi side. A monitoring committee will ensure that progress in these refinery projects aligns with the plan laid down by both sides."
Additionally, the Saudi Ministry of Investment announced plans to open an office of the Saudi Sovereign Fund in India, following discussions between Commerce Minister Piyush Goyal and Khalid Al Falih, Minister of Investment of the Kingdom of Saudi Arabia. Minister Goyal stated, "Gift city officials will be sent to Saudi Arabia. Officials from FICCI, Invest India, and the Commerce Ministry will open an investment and trade promotion office located in Riyadh."
Khalid Al Falih, the Minister of Investment of the Kingdom of Saudi Arabia, confirmed Saudi Arabia's intention to open an office in India for investment facilitation. "We will send our officials to GIFT City to assess the feasibility of opening a sovereign fund office in Mumbai, Delhi, or GIFT City," he said.
The State Visit of Crown Prince Mohammed bin Salman Al Saud to India extends for three days following his participation in the G20 Summit. During his visit, the Saudi Crown Prince and Prime Minister Narendra Modi held a bilateral meeting in New Delhi, attended by External Affairs Minister S Jaishankar, National Security Advisor Ajit Doval, and other dignitaries.
