- The Cooperation Council for the Arab States of the Gulf also known as the Gulf Cooperation Council (GCC) was established by an agreement concluded on 25 May 1981 in Riyadh, Saudi Arabia among Bahrain, Kuwait, Oman, Qatar , Saudi Arabia and UAE in view of their special relations, geographic proximity, similar political systems based on Islamic beliefs, joint destiny and common objectives.
- The official language is Arabic. The constitution of the GCC precisely reflected the importance of seeking ways to make the unity of Arab States a reality.
- India considers the Gulf region as part of its “extended neighbourhood” and a part of its “natural economic hinterland”.
- The GCC has, evidently, become a major trade partner for India as bilateral trade has grown tremendously.
- All current member states are monarchies, including three constitutional monarchies (Qatar, Kuwait, and Bahrain), two absolute monarchies (Saudi Arabia and Oman), and one federal monarchy (the United Arab Emirates).
- The GCC members are some of the fastest-growing economies of the world. It has a total GDP (nominal) of $1.638 trillion.
Gulf Cooperation Council (GCC) Objectives
- Coordination, integration and inter-connection between Member States in all fields and strengthening ties between their people.
- Formulating similar regulations in various fields such as economy, finance, trade, customs, tourism, legislation, administration, as well as fostering scientific and technical progress in industry, mining, agriculture , water and animal resources and others.
- The GCC comprises six main branches that carry out various tasks, from the preparation of meetings to the implementation of policies.
- They are – Supreme Council, Ministerial Council, Secretariat-General, Consultative Commission, Commission for the Settlement of Disputes and the Secretary-General.
- The Secretariat is located in Riyadh, Saudi Arabia.
Role of GCC today
- Whether the GCC still has a relevant function and role in the region is questionable. Though it was created for the purpose of solidifying union ranks, the blockade imposed on Qatar by its neighbours has largely annulled these principles.
- The Gulf states have in the past differed in their views on several issues that have unfolded in the region over the past two decades. The role of the GCC has also been diminishing ever since the 2003 US-led invasion of Iraq, with the six states illustrating various approaches to the war and its consequences. This has been enhanced during the wave of protests that swept the Middle East in 2011, known as the Arab Spring.
- Saudi Arabia has gained a dominant role within the GCC today.
What is Persian Gulf region and why is it so significant?
- The lands around the Persian Gulf are shared by eight countries – Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.
- These countries are major producers of crude oil and natural gas, and thereby contribute critically to the global economy and to their own prosperity.
- The area has approximately two-thirds of the world’s estimated proven oil reserves and one-third of the world’s estimated proven natural gas reserves. This factor has added to their geopolitical significance.
- A considerable amount of sea trade passes through the gulf, leading to heavy traffic in the region.
India and Gulf Cooperation Council (GCC)
The Gulf Cooperation Council (GCC) as a collective entity has tremendous significance for India. The Gulf represents the “immediate” neighbourhood of India separated only by the Arabian Sea. India, therefore, has a vital stake in the stability, security and economic well-being of the Gulf. India and GCC both are members of the FATF.
Significance of GCC to India
- The Gulf is an integral part of India’s ‘extended neighbourhood’, both by way of geographical proximity and as an area of expanded interests and growing Indian influence.
- The GCC has emerged as a major trading partner for India; it has vast potential as India’s investment partner for the future.
- The GCC’s substantial oil and gas reserves are of vital importance for India’s energy needs. India is dependent on the six Gulf Cooperation Council (GCC) states for 42 percent of its overall oil imports; three of the top five oil suppliers to India are Gulf states.
- Indians make up the Gulf states’ largest expatriate community, with an estimated 7.6 million Indian nationals living and working in the region; especially in Saudi Arabia and the UAE.
- The GCC is India’s largest regional-bloc trading partner, which accounted for $104 billion of trade in 2017–18, nearly a 7 percent increase from $97 billion the previous year. This is higher than both India–ASEAN trade ($81 billion) and India–EU trade ($102 billion) in 2017-18.
- In recent decades, the growing threat of terrorism, piracy and the rise of other non-state actors have made the GCC countries even more significant for India.
- Indian Ocean has been a strategic region for India and engaging the Gulf countries through defence cooperation which would ensure India’s hold in the western part of the Arabian Sea, which includes trade choke points like the Strait of Hormuz, the Suez Canal, and the Gulf of Oman, etc.
Areas of Cooperation
Better relations with Gulf countries is one of the pillars of India’s foreign policy. This is evident from the Indian PM initiative of ‘Link West’ Policy and visit to UAE and Saudi Arabia in recent years. During the first-ever India-GCC Political Dialogue in 2003, the GCC Chairman stated that UN Security Council should be expanded and India should be a member of the Security Council.
- The governments of the GCC members are India-friendly and Indian-friendly.
- The Prime MInister of India has received the ‘Order of Zayed’, the highest civilian order of the UAE and the ‘King Hamad Order of the Renaissance’, the third-highest civilian order of Bahrain.
- In the recent past, Saudi Arabia and the UAE have not adopted hostile posture to India’s domestic developments such as removing the special status for Jammu & Kashmir under Article 370.
- The GCC welcomed India’s inclusion in the United Nations Security Council (UNSC) as a non-permanent member from January 2021.
- India assured continuing the flow of food, medicines and essential items to the Gulf region. Supply chains from India to the Gulf were not disrupted despite the lockdowns during the pandemic.
- India’s old, historical ties with GCC states, coupled with increasing imports of oil and gas, growing trade and investment opportunities, and presence of approximately 6 million Indian workers in the region are of vital interest to India.
- India’s economic linkages with the GCC have increased steadily, especially due to growth in oil imports. During 2012-13, the bilateral two-way trade was USD 158 billion.
- The United Arab Emirates (UAE) and Saudi Arabia are India’s third and fourth-largest trading partners respectively and the total bilateral trade of the GCC countries with India for the year 2018-19 stood at USD 121.34 billion.
- GCC is currently India’s largest trading partner bloc with bilateral merchandise trade valued at over 154 billion US dollars in the financial year 2021-22.
- GCC countries contribute almost 35 per cent of India’s oil imports and 70 percent of gas imports.
- India’s overall crude oil imports from the GCC in 2021-22 were about $48 billion, while LNG and LPG imports in 2021- 22 stood at about $21 billion.
- India’s exports to the GCC member countries grew by over 58% to about $44 billion in 2021-22 against nearly $28 billion in 2020-21.
Terrorism and Security
- The rise of terrorism and piracy in the Arabian Sea are two important cases in point for which active cooperation between the two is necessary.
- The Arab Spring, ISIS, Yemen Crisis gave India instant anxiety over sharp oil price rise and the evacuation of its nationals from Libya, Egypt, Iraq and Yemen.
- The GCC is also looking towards India as a reliable partner as the incidents of 9/11 terrorist attacks have induced a change in the security environment of the Gulf region.
- Though USA remains the sole power for maintaining security and stability in the Gulf , the rulers are looking eastward to diversify their engagements in economic and strategic fields.
- The common political and security concerns of India and GCC translate into efforts for peace, security and stability in the Gulf region and South Asia.
- Both India and the GCC are members of the Financial Action Task Force (FATF).
- Apart from the participation of Saudi Arabia, Oman, Kuwait, and others in India’s mega multilateral Milan Exercise, India also has bilateral exercises with most of them.
- India and Oman hold annual bilateral exercises across all three wings of the armed forces (Army Exercise ‘Al Najah’, Air Force Exercise ‘Eastern Bridge’, Naval Exercise ‘Naseem al Bahr’). Further, Oman has provided the Indian Navy access to the Port of Duqm SEZ which is one of Indian Ocean’s largest deep-sea ports.
- India has a bilateral naval (In-UAE BILAT) as well as an air force exercise (Desert Eagle-II) with the UAE.
Significance of India and GCC FTA
- India and GCC signed a Framework Agreement for enhancing and developing economic cooperation between the two sides in New Delhi in August 2004.
- Trade potential: The GCC region holds huge trade potential and a trade agreement would help in further boosting India’s exports to that market.
- Oil and gas reserves: The GCC’s substantial oil and gas reserves are of utmost importance for India’s energy needs.
- Good relations: India shares good relations with most of the countries in the Gulf.
- India can increase its exports: GCC is a major import dependent region. India can increase its exports of food items, clothing and several other goods.
- Duty concessions under a trade agreement will help in tapping that market.
- India needs to develop a cohesive approach to develop ties in diverse areas such as renewables, water conservation, food security, digital technology and skills development.
Free Trade Agreement (FTA)
- A free trade agreement is a pact between two or more nations to reduce barriers to imports and exports among them.
- Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
- The concept of free trade is the opposite of trade protectionism or economic isolationism.
Challenges India Faces with GCC
- India has not been able to attract substantial Arab investment. FDI from the GCC countries between 2000 and 2014 has remained stagnant, at $3.2 billion. This is partly due to the India’s reluctance to establish an Islamic Bank but also attributed to Arab investors’ lack of confidence on Indian finance market.
- Gulf Cooperation Council uwait Pakistan continues to have a strong political constituency across Muslim West Asia which tilts the balance of political support in the region in its favor visa-vis India.
- The oil and gas prices, along with the rising cost of “war conditions” has led to the slowing of Arab Gulf economies, resulting in salary cuts, layoffs, tax levies, contracting employment opportunities, and the nationalization of workforce at the cost of the expatriate community.
- India holds an edge over China in terms of its “soft power” in the region, and is increasingly viewed by Gulf countries as a security partner. But China has already made rapid inroads in the Gulf by virtue of having acquired equity stakes in the region’s upstream oil and gas sector, and having successfully penetrated Arab markets.
- India is a strong advocate of multilateral Asian security cooperation. However, under a U.S. hegemonic security system, Gulf Arab leaders do not appear to find the idea of a collective security system very appealing. Also, GCC is badly divided today as seen in the Qatar crisis. India’s burgeoning security relationship with Israel is also a concern despite India’s long standing support to the “Two-State solution” on Palestine Issue.
- Ideological, political and religious divisions in India over the Middle East have long complicated Delhi’s
thinking of the region. Keeping these divisions aside, India should develop annual engagements with the leaders of the Gulf Cooperation Council.
- With India’s growing stakes in the Gulf and the rapid political and security developments happening in the region, it is in India’s interest to look beyond the trade and business, and deeply engage with the GCC in other important sectors as well.
- The Gulf region has historical, political, economic, strategic and cultural significance for India. India-GCC Free Trade Agreement (FTA) can provide a boost to the relations.
- Presently, the GCC region is volatile, thus, India needs to safeguard its large economic, political and demographic stakes in the region.