India likely to Ink FTA with Gulf Nations Soon

30 May 2007:Mumbai

The third meeting of the India-GCC Industrial Forum began on Tuesday with a positive indication from both the sides that India would soon ink a free trade agreement (FTA) with the Gulf countries.

In his keynote address at the inaugural session, Mr Kamal Nath, Union Minister for Commerce and Industry, indicated that India was in the process of negotiating an FTA with the Gulf countries. "Talks in this regard are likely to be concluded very soon."

He was hopeful that the meeting would further enhance the expanding economic relations between India and the Gulf Co-operation Council (GCC) countries.

Mr Maqbool Ali Sultan, Minister for Commerce and Industry, Sultanate of Oman, echoed similar sentiments.

He was hopeful that talks would conclude by the year-end and the FTA could be in place by mid-2008.

Dr Hasheem Yamani, Saudi Minister of Commerce and Industry, said that the first round of negotiations to create a free trade area was held in March 2006, when it was agreed that both goods and services will be covered.

Mr Kamal Nath said that in the last five years, India's total trade with the GCC countries has risen threefold - from $5.55 billion in 2000-01 to $23.42 billion in 2005-06.

"I am convinced that the Gulf region is on par in terms of demand creation when compared to even the US. It is already a target market for more than three quarters of India's main products, including fresh fruits and vegetables."

The Minister also said that GCC countries account for one per cent of the total FDI into India, with $503.32 million in investments between 1991 and February 2007.

The UAE has emerged as the single largest investor into India among the GCC countries, accounting for nearly 79 per cent ($321 million), followed by Bahrain ($32.7 million) and Oman ($ 24.51 million).

The GCC countries continue to be a major supplier of oil to India, meeting almost two-thirds of the country's oil requirements.

"India is looking at providing refining capacities to the Gulf. I invite oil companies from the Gulf to set up their facilities in India, as it will not only add a new dimension to our trade but also help in enhancing capacities," Mr Kamal Nath said.

He added that infrastructure was one area where India offers immense opportunities for investment, with the requirement to this sector in the next five years estimated at $320 billion.

"Air passenger traffic has grown in excess of 30 per cent in the last three years. I expect investors from this region to actively participate in the ongoing airport modernisation programme across the country."

Link: The Hindu Business Line