India and GCC Strengthen Ties at Foreign Ministers’ Meeting

What’s in today’s article?

• Why in News?
• Gulf Cooperation Council (GCC)
• Significance of GCC for India
• India and GCC Relation

 Why in News?

• External Affairs Minister S Jaishankar on Sunday arrived in Saudi Arabia’s capital, Riyadh, to attend the First India-Gulf Cooperation Council (GCC) Foreign Ministers’ Meeting.
   

Gulf Cooperation Council (GCC)

• The Gulf Cooperation Council (GCC) is a political and economic alliance of six countries in the Arabian Peninsula.
• These six countries are: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
• Established in 1981, the GCC promotes economic, security, cultural and social cooperation between the six states.
• It holds a summit every year to discuss cooperation and regional affairs.

Significance of GCC for India

• Energy Security
  • Together, the GCC countries possess almost half of the world’s oil reserves. 
  • Currently, GCC suppliers account for around 34% of India’s crude imports.
• Trade and investments (discussed in detail in the later section of this article)
  • Currently, the region is expanding beyond the energy sector into other fields, such as tourism, construction and finance. 
  • This opens up the opportunities for trade and investments for countries like India.
• Presence of Indian Diaspora
  • Indian diaspora in the Middle East accounts for around 8.9 million people.
  • As per the RBI report, remittances sent from this region stands to be around 30% of the total remittances received by India from abroad.
• Geostrategic
  • GCC countries sit across the Persian Gulf, which is an important sea lane for global trade.
  • From the strategic point of view, India and GCC share the desire for political stability and security in the region. 

India and GCC Relation

• Introduction
  • The Gulf constitutes the immediate neighborhood of India separated only by the Arabian Sea. 
  • The GCC has emerged as a major trading partner for India and it also has a vast potential as an important investment partner.
• Political Dialogue
  • The first-ever India-GCC Political Dialogue was held on the sidelines of the United Nations General Assembly in 2003.
  • India and GCC signed an MoU on the Mechanisms of Consultations in September 2022.
  • The MoU creates a framework for annual dialogue between EAM and the GCC-Troika (GCC-SG, Foreign Minister of the country holding current GCC presidency, and Foreign Minister of the country that will hold next GCC presidency), and any other Foreign Minister(s)/Senior Officials from the GCC countries.
• Economic and Commercial Relations
  • During FY 2023-24, India-GCC bilateral trade stood at USD 161.59 billion. 
  • India’s exports were USD 56.3 billion in FY 2023-24, India’s imports were USD 105.3 billion in FY 2023-24.
    • India’s economic linkages with the GCC have increased steadily, especially due to growth in oil imports. 
    • These have increased significantly in FY22 due to rising oil prices in the wake of the Russian-Ukrainian conflict, as well as due to the resumption of demand following the COVID-19 disruption.
• India-GCC Free Trade Agreement (FTA)
  • India and the GCC signed a Framework Agreement for enhancing and developing economic cooperation between the two sides in New Delhi in August 2004. 
  • The India-GCC FTA is under negotiation and may benefit from some renewed momentum following the India-UAE FTA.
• Energy cooperation
  • GCC contributes to 35% of India’s oil imports and 70% of gas imports.
  • India is executing the second phase of its Strategic Petroleum Reserve (SPR). Several GCC countries have expressed their interest in the same.
• Indian Diaspora and remittances
  • According to latest figures, there are approximately 8.9 million Indian expats residing in GCC countries which is approximately 66% of non-resident Indians. 
  • According to the RBI Remittances Survey 2021, the share of remittances from the GCC region in India’s inward remittances is estimated to have declined from more than 50% in 2016-17 to about 30% in 2020-21.
    • This still represents a major component of India’s total inward remittances. 

Q.1. Why is the Gulf Cooperation Council (GCC) important for India?

The GCC is vital for India’s energy security, providing 35% of its crude oil imports. It also offers significant trade and investment opportunities, especially in tourism, construction, and finance, due to expanding economic relations.

Q.2. What were the key highlights of the first India-GCC Foreign Ministers’ Meeting?

The meeting in Riyadh focused on deepening energy cooperation, boosting bilateral trade (USD 161.59 billion), and exploring new areas of investment. Discussions also touched on strategic issues related to political stability in the region.

Source: EAM to attend first India-GCC foreign ministers meet in Riyadh on September 8-9

Embassy of India Riyadh

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