India-Gulf Bloc FTA Talks May Be Delayed Until Second Half of the Year Amid Ongoing Iran Conflict

India-GCC Free Trade Agreement Talks Delayed

Negotiations for the free trade agreement (FTA) between India and the Gulf Cooperation Council (GCC) are likely to commence in the second half of 2026, due to the ongoing war in West Asia.

The conflict, which began on February 28, 2026, has disrupted key shipping routes, including the Strait of Hormuz, through which approximately 20% of the world's oil and liquefied natural gas (LNG) flows. This has resulted in temporary shutdowns at oil terminals, increased shipping costs, and delays in exports for Gulf countries, putting pressure on their economies.

For India, which imports a significant amount of its crude oil and LNG from the GCC, these disruptions have led to increased energy costs and logistical hurdles. The delay in initiating the first round of talks for the FTA is also attributed to the GCC's complex decision-making system, which involves internal reviews and alignments on sensitive sectors, negotiating positions, tariff lines, services commitments, and investment protections.

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In February 2026, India and the GCC signed the Terms of Reference (ToR) to launch FTA negotiations. The ToR sets the scope and procedural framework for the agreement, but does not finalize detailed tariff schedules, market access commitments, or rules of origin.

The GCC is India's largest trading partner in West Asia, with bilateral trade exceeding $178 billion in FY25. The region hosts around 10 million Indians, making a trade deal with the bloc significant. India exports a range of goods to the Gulf, including food, textiles, jewelry, pharmaceuticals, and engineering items, while energy imports such as crude oil, LNG, and LPG form a significant part of the trade.