By Sadik Sagar, Dhaka
India’s renewed engagement with the Gulf Cooperation Council (GCC) marks a significant shift in regional trade dynamics, as the two sides have formally signed the Terms of Reference (ToR) to resume negotiations for a Free Trade Agreement (FTA). This move follows India’s recent trade agreements with the European Union and the United States, further solidifying its global trade ambitions. The ToR was signed in New Delhi, with prominent figures such as Commerce Minister Piyush Goyal and GCC’s chief negotiator Raja Al Marzouqi in attendance. The FTA process, which began in 2004 but stalled in 2011, now stands poised for revival, aiming to deepen economic ties between India and the six GCC nations—Saudi Arabia, the UAE, Qatar, Kuwait, Oman, and Bahrain.
Bilateral trade between India and the GCC has seen remarkable growth over the years, reaching approximately $185 billion in 2022–2023. Key sectors include energy imports, such as crude oil and liquefied natural gas (LNG), alongside a robust flow of remittances from the large Indian expatriate population in the Gulf. The FTA is expected to boost trade by eliminating duties and non-tariff barriers, particularly benefiting India’s petrochemical industry, infrastructure development, and information technology (IT) sector. The proposed agreement also aims to foster greater investment, bringing more predictability and stability to the business environment.
The timing of India’s expanded economic engagement with the GCC carries significant implications for the wider region, particularly Bangladesh. Bangladesh, which has long depended on remittances from Gulf countries and trade in sectors like textiles, now faces the prospect of India’s growing influence in the region. While both countries have strong ties with the Gulf, India’s enhanced economic position could eclipse Bangladesh’s efforts to secure favorable terms for its own industries and migrant workers. In particular, Indian companies, especially in infrastructure and petrochemicals, may gain a competitive advantage over their Bangladeshi counterparts. Furthermore, India’s booming ICT sector stands poised to dominate the GCC market, potentially leaving little room for Bangladesh’s tech exports.
Bangladesh’s reliance on the Gulf for remittances could also be affected. As India strengthens its economic relationship with the region, GCC nations may find India a more stable and diversified partner, leading to greater competition for job opportunities for Bangladeshi workers. The evolving trade dynamics could force Bangladesh to re-evaluate its strategies, both diplomatically and economically, to maintain its foothold in the Gulf markets.
However, opportunities still exist for Bangladesh to benefit from the changing regional landscape. The country could explore sector-specific FTAs with individual GCC nations or seek stronger partnerships with India, particularly in areas like labor and textiles where it has a competitive advantage. A proactive approach could help Bangladesh navigate the shifting trade environment and ensure its interests remain protected.
In conclusion, while India’s renewed trade pact negotiations with the GCC represent a strategic win for New Delhi, they also introduce new challenges for Bangladesh, which must adapt to the changing dynamics of the Gulf region to safeguard its economic and labor interests.
