India and Qatar are considering a potential trade agreement, but experts suggest that India should proceed with caution, especially in the petrochemical sector.
The Global Trade Research Initiative (GTRI) has advised that any trade deal, particularly a Comprehensive Economic Partnership Agreement (CEPA), must be carefully evaluated to ensure it does not negatively impact India's domestic industries.
During a recent meeting between Prime Minister Narendra Modi and Qatar’s Amir Sheikh Tamim bin Hamad Al-Thani, both sides agreed to explore the possibility of a CEPA. The goal of this agreement is to double bilateral trade to USD 28 billion by 2030.
Such agreements typically involve significant reductions in customs duties on goods and relaxed regulations to promote trade in services and investments.
Despite the potential benefits, GTRI founder Ajay Srivastava has warned that India’s well-established petrochemical sector could face challenges if lower tariffs allow a surge of Qatari imports.
Given that India already has a considerable trade deficit with Qatar, any trade agreement must be structured to prevent further imbalance. Without a well-balanced approach, Indian industries may struggle to compete with cheaper imports.
India’s trade with Qatar has long been marked by an imbalance. In the financial year 2023-24, India imported goods worth USD 12.34 billion from Qatar, while its exports to the country stood at only USD 1.7 billion.
A major portion of India’s imports from Qatar consists of liquefied natural gas (LNG), petroleum crude, propane, and butane, which are essential for energy production. Meanwhile, India primarily exports basmati rice, machinery, and iron and steel products to Qatar.
The total bilateral trade between the two nations has seen a decline. In 2023-24, the trade value stood at USD 14 billion, down from USD 18.77 billion in the previous financial year. Despite the declining trade figures, Qatar remains an important economic partner for India.
The Gulf nation is one of the largest suppliers of LNG and liquefied petroleum gas (LPG) to India, along with other essential chemicals and petrochemical products.
India has received USD 1.5 billion in foreign direct investments from Qatar since April 2000. Qatar’s economy, with a GDP of USD 221.4 billion and a population of about 3.1 million, is largely dependent on energy exports.
On the other hand, India, with a GDP of USD 4 trillion and a population of 1.4 billion, has a more diverse industrial base. These differences in economic structure make trade negotiations complex and require careful consideration.
Qatar is a member of the Gulf Cooperation Council (GCC), which also includes Bahrain, Kuwait, Oman, Saudi Arabia, and the United Arab Emirates. India has already signed a free trade agreement with the UAE and is in the final stages of discussions for a similar deal with Oman.
Expanding trade relations within the Gulf region could benefit India, but each agreement must be tailored to safeguard its domestic industries.
India’s exports to Qatar include a wide range of products such as cereals, iron and steel articles, processed food, electrical machinery, textiles, and chemicals. However, the dominance of energy imports from Qatar results in a trade surplus in Qatar’s favour.
India also imports essential industrial materials like ammonia, urea, ethylene, and polyethylene from Qatar, which are crucial for manufacturing and agriculture.
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