India will sign free trade agreement with Gulf countries
On the diplomatic front, India has made such a move which can spoil Pakistan’s economic plans. Actually, India is preparing to further strengthen its influence in global trade. India has started formal negotiations for a Free Trade Agreement (FTA) with the Gulf Cooperation Council (GCC). This news is no less than a nightmare for Pakistan, because the countries which it considered its ‘friends’ and lenders, are now going to become trading partners with India.
India’s masterstroke, direct entry into Gulf countries
This step of India is not just a trade agreement but a major diplomatic victory. Gulf Cooperation Council or GCC is not a small group. This includes rich and powerful countries like Saudi Arabia, United Arab Emirates (UAE), Kuwait, Qatar, Oman and Bahrain. This group, formed in 1981, is today a major center of energy, finance and infrastructure in the world. India is now going to enter into a free trade agreement with these countries. If we understand in common man’s language, after this agreement, Indian goods will be able to reach these countries without any heavy tax or hindrance. This is a path of progress for India, but this news has become a headache for Pakistan because it keeps requesting these countries for help for its deteriorating economy.
What is the loss to Pakistan from this deal?
Now the question is, what is the loss to Pakistan from this deal of India? The answer to this is directly related to ‘Economics’. Actually, both India and Pakistan sell largely similar goods to the Gulf countries. This includes agricultural products, clothes and everyday consumer goods. Till now the rules for both the countries were almost the same. But, as soon as the FTA is implemented between India and GCC, the import duty on Indian goods will either be eliminated or will be greatly reduced.
Its direct effect will be that Indian goods will become much cheaper in the markets of Gulf countries compared to Pakistan. When good quality Indian goods will be available at lower prices in the shops, then obviously the demand for Pakistani goods will reduce. Due to this, Pakistan’s exports will fall and its market share will reduce. It will be impossible for Pakistan, which is already facing economic crisis, to bear the decline in its exports.
The formula of defense cooperation in exchange for loan also failed
The matter is not limited to just trade, its strategic implications are also very deep. Countries like Saudi Arabia and UAE have been helpful to Pakistan for a long time. Pakistan has often been raising its voice against India on these forums. But now the equations are changing. There are reports that Pakistan is trying to repay its old debt by providing military equipment and defense cooperation instead of cash payment. At the same time, India is doing future trade with them. The situation is such that even countries like Türkiye have now distanced themselves from the Islamic defense group in which Pakistan was trying to include Saudi Arabia. This means that India’s deal with Pakistan can isolate it economically and diplomatically.