IAS Gyan

Daily News Analysis


9th June, 2022 Economy

Disclaimer: Copyright infringement not intended


  • In 2021-22, India’s bilateral trade with the GCC stood at nearly $154 billion and its trade deficit at around $67 billion.


Gulf Countries

  • The Arab states of the Persian Gulf refer to a group of Arab states which border the Persian Gulf. There are seven member states of the Arab League in the region: Bahrain, Kuwait, Iraq, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
  • The prominent regional political union Gulf Cooperation Council includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.


India- Gulf Countries relationship: Background

  • India's relations with the people of the Gulf and the Arabian Peninsula date back several millennia when Indian sailors, merchants, intellectuals and men of faith traversed the waters of the Indian Ocean. They exchanged navigation skills, goods, ideas and belief systems.
  • They thus enriched each other materially and spiritually and created a shared ethos that endures to this day.


  • The significant presence of the Indian community in the Gulf countries over the last 40 years and the role of Indian enterprises in the development of the region has cemented this relationship.
  • Thus, the relationship between India and the Gulf nations has remained strong through decades. It is not only based on trade and commerce but also on history and culture.


Why Gulf nations are crucial for India's economy?

Oil Imports

  • A third of India’s oil imports come from Bahrain, Kuwait, Qatar, Oman, Saudi Arabia, and the UAE, also known as Gulf Cooperation Council (GCC). Qatar is also India’s leading supplier of LNG. In other words, the bulk of India’s energy requirements is taken care of by the six GCC countries.

Annual Remittances

  • The GCC nations account for nearly 65 per cent of India’s impressive annual remittances of more than $80 billion in the last three years.
  • They host a bulk of Indian migrants — nearly nine million in all. These countries account also for almost 15 per cent of India’s global trade. The numbers clearly show that GCC countries play a key role in India’s economy.
  • Kerala has the highest percentage of remittances, while Delhi's share has risen in recent years. UP and Bihar have experienced substantial growth.


Largest Trading Partner

  • Among GCC countries, the UAE is India’s largest trading partner — overall, it is third after the US and China — the latest Ministry of Commerce and Industry data shows.
  • Trade with the UAE accounts for more than seven per cent of India’s total trade. As per the latest available data for 2021-22, India exported goods and services worth $28 billion, and the import bill totaled nearly $45 billion.

Imports from GCC countries

  • Nearly 60 per cent of India’s imports from GCC countries are crude and natural gas.
  • Other items include diamond, gold, and polymers. On the other hand, India’s exports include finished jewellery, refined petroleum, rice, garments, cars, and broadcasting equipment.



  • The United Arab Emirates is India's third-largest trading partner.
  • The Gulf states also rely on India. After the United States, the UAE is India's second-largest export destination and third-largest trading partner.
  • India and the UAE's bilateral trade was valued at $72.9 billion in 2021-22, with India's exports accounting for $28.4 billion.
  • Under the newly concluded Comprehensive Economic Partnership Agreement, total trade is expected to reach $100 billion by 2026.
  • The Gulf region is especially reliant on food and cereal imports; over 85% of their food and 93% of their cereals are imported.
  • Rice, buffalo meat, spices, marine products, fruits, vegetables, and sugar are all key exports from India.


  • The aviation industry of Gulf countries rely heavily on AAE Indian flyers.
  • The advent of global transit hubs in the Gulf, serviced by local airlines such as Emirates, Etihad Airways, and Qatar Airways, has reduced the share of the lucrative international travel market held by US and India-based airlines.


  • Indians make up more than a third of the UAE's population. In the Gulf, there are 89 lakh Indian citizens.
  • Some of the major retail stores and restaurants in the Gulf countries are owned by Indians.


Final Thoughts

  • The GCC has emerged as a major trading partner of India. It has vast potential as India's investment partner for the future.
  • The GCC's substantial oil and gas reserves are of utmost importance for India's energy needs. The GCC countries are collectively host to a large Indian expatriate community.