India-Pakistan trade with Gulf hits $36bn

As India and Pakistan celebrate their 60th year of independence, takes a look at the level of bilateral trade between the two nations and the GCC.
India-Pakistan trade with Gulf hits $36bn
By Talal Malik
Tue 14 Aug 2007 07:23 PM

Bilateral trade between India and Pakistan and the Gulf Co-operation Council (GCC) bloc currently stands at around $36 billion, according to statistics from the two country's central banks.

After the US, India and Pakistan are the second largest trading partners with the GCC member states, which include Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain and Oman.

India, by itself, is the GCC’s second largest trading partner, with bilateral trade estimated at nearly $25 billion in 2006, excluding energy imports by India worth approximately another $22 billion.

The UAE emerged as the single largest investor in India among the GCC countries, accounting for nearly 79% of the total inflow from the region.

Indian Minister of Commerce and Industry Kamal Nath said on a visit to Dubai in February that India's total trade with the GCC countries in the last five years has risen more than fourfold from $5.55 billion in 2000-01 to $23.42 billion in 2005-06.

Pakistan’s bilateral trade with the GCC in 2006 was estimated at $11 billion. The UAE was also the country’s largest trading partner in the GCC with over $5 billion in bilateral trade for fiscal 2006, said the State Bank of Pakistan.


Though the exact size of expatriate communities in the GCC is difficult to establish, it has been estimated there are around 6 million Indians and 3 million Pakistanis in the Gulf. In some GCC countries Indians and Pakistanis make up more than 60% of the population.

With such large numbers of expatriates working in the region, the amount of money being sent home is huge. Last year it is estimated that remittances of around $9 billion was sent back to the two countries, the central banks' figures show.

Expatriate workers sent back about $6 billion in 2006 to India. The Reserve Bank of India estimates that 24% of its remittances come from Gulf countries.

According to the latest data from the State Bank of Pakistan, expatriates remitted $2.68 billion to Pakistan in the fiscal year July 2006 to June 2007. This represented a 28% rise from the $2.06 billion in the previous fiscal year, with Saudi Arabia the GCC country from which the largest proportion of remittance was sent.

Free Trade

Talks about a free trade agreement (FTA) between the GCC and the two countries have taken place for the last few years. Senior officials from the Indian government have said such an agreement could be signed in 2008.

At the end of the first meeting of the UAE-India Free Trade Policy in May, India and the GCC said the process to finalise a free trade pact would be expedited and also released a joint declaration about the future course of economic ties.

The Indian Ambassador to Bahrain, Balkrishna Shetty, in July commented further that negotiations on a GCC and India FTA should be finalised by the end of the year and the agreement to be signed by early next year.

Gulf countries with strong trading links with India would welcome such a pact. HH Sheikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of UAE and Ruler of Dubai, in his visit to India in March said he would like the UAE to be India's top trading partner, ahead of the US.

Pakistan is also keen to enter into a FTA with the Gulf. Pakistani Prime Minister Shaukat Aziz in June emphasised the need to speed up the process of signing an FTA between the bloc when he visited the region.

Government officials say that though an FTA could be signed this year, Pakistan was pursuing a two-tier track to gain trading agreement with the bloc, including bilaterally with individual GCC members like Bahrain.

Pakistan’s Ambassador to Bahrain, Iftikhar Hussain Kazmi, said in January that an FTA with the GCC would necessarily cover the Bahrain FTA, but bilateral talks usually took place faster than those conducted multilaterally.

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