How the GCC Can Emerge as a Manufacturing and Trade Hub for the Subcontinent: A Strategic Perspective with the Introduction of IMEC

The Gulf Cooperation Council (GCC) countries—comprising Saudi Arabia, the UAE, Qatar, Oman, Kuwait, and Bahrain—are strategically poised to become a manufacturing and trade hub for the Indian subcontinent. The introduction of the India-Middle East-Europe Economic Corridor (IMEC), announced at the 2023 G20 summit, adds another layer of potential for the GCC to enhance its position as a global trade nexus. This article explores the factors that make the GCC a prime location for manufacturing and trade, particularly with the subcontinent, and how the IMEC could influence the broader regional and global economy.

?1. Strategic Location: A Gateway Between Asia, Africa, and Europe

The GCC's geographical position between major global markets—Asia, Europe, and Africa—gives it a significant advantage in becoming a central trade hub. The Gulf states sit at the crossroads of some of the world's busiest maritime trade routes, connecting:

• The Indian Subcontinent (India, Pakistan, Bangladesh) and Southeast Asia to Europe through the Suez Canal.
• African Markets through the Red Sea and Arabian Peninsula.
• China and East Asia to Europe via the Arabian Sea.

?With minimalistic flight times or short sea routes to major cities in India, Pakistan, and Bangladesh, the GCC's location offers logistical efficiency that strengthens its ability to serve as a hub for regional trade and manufacturing.

2. Proximity to Major Markets and Growing Trade Relations

The GCC is already one of the largest trading partners for the Indian subcontinent:

·???????? India-GCC Trade: Bilateral trade between India and the GCC exceeded $154 billion in 2022, with India being a key importer of crude oil and gas from the Gulf. The UAE alone accounted for $88 billion in trade with India.

·???????? Pakistan-GCC Trade: Trade between Pakistan and the GCC is also significant, particularly in energy and labor markets. The GCC is home to over 4.5 million Pakistani expatriates who contribute through remittances.

·???????? Bangladesh-GCC Trade: The GCC is a growing market for Bangladesh’s garment exports, while Bangladesh imports energy and investments from the Gulf.

3. Industrial and Manufacturing Potential of the GCC

Historically dependent on hydrocarbons, the GCC is now diversifying its economy with significant investments in industrial manufacturing and logistics infrastructure. Key initiatives include:

·???????? Saudi Vision 2030: Saudi Arabia is investing heavily in manufacturing, logistics, and trade infrastructure. The King Abdullah Economic City (KAEC) and Neom aim to transform the Kingdom into a manufacturing hub.

·???????? Dubai's Jebel Ali Free Zone: The UAE has developed several special economic zones (SEZs), including Jebel Ali, one of the world’s largest and busiest free trade zones. It hosts over 8,000 companies from 100 countries and offers tax-free zones and easy access to shipping routes.

·???????? Oman’s Duqm Port and SEZ: Oman is positioning itself as a logistics and manufacturing hub, particularly for industrial exports to South Asia and East Africa. The development of Duqm SEZ is part of this strategy.

4. The Role of IMEC: Boosting Connectivity and Trade

The India-Middle East-Europe Economic Corridor (IMEC), unveiled in 2023, is a transformative infrastructure project aimed at creating a seamless trade route that links India with Europe via the Middle East. The IMEC will consist of:

·???????? Rail and road networks to connect the UAE, Saudi Arabia, and Jordan to Israel and eventually to European ports.

·???????? Ports and digital infrastructure upgrades that reduce shipping time and improve the flow of goods and services across regions.

·???????? A maritime corridor connecting Indian ports to Gulf ports, enhancing bilateral trade and reducing transit times.

IMEC’s Potential Impact:

·???????? Shorter Shipping Times: IMEC could reduce shipping time between India and Europe by approximately 40% compared to the Suez Canal route. This faster transit will enhance the competitiveness of goods passing through the Gulf.

·???????? Energy Trade Expansion: The corridor could facilitate the quicker transport of energy resources from the Gulf to Europe and other parts of Asia, solidifying the GCC's role as a critical energy hub.

·???????? Diversification and Industrial Growth: IMEC’s infrastructure investments will provide a platform for the GCC to expand its industrial base, making it an attractive hub for manufacturing, assembly, and distribution for the subcontinent.

?5. Infrastructure and Logistics Readiness

The GCC countries have made enormous strides in upgrading their logistics infrastructure to support trade:

·???????? The UAE is home to Jebel Ali Port, the largest in the Middle East, with a capacity of over 19 million TEUs (twenty-foot equivalent units) annually. Abu Dhabi Ports and Khalifa Industrial Zone (KIZAD) also support manufacturing and trade.

·???????? Saudi Arabia has heavily invested in modern ports, including the King Abdullah Port, which is designed to handle over 20 million TEUs annually, and the Jeddah Islamic Port.

·???????? Oman's Sohar Port has expanded to handle growing volumes of trade, particularly between Asia and the Middle East, positioning it as a logistics hub for the Indian subcontinent.

?6. Energy and Raw Material Accessibility

The GCC's role as a global energy exporter further enhances its attractiveness as a manufacturing hub. With abundant oil and natural gas resources, the region can provide energy at a lower cost for manufacturing industries.

·???????? Saudi Arabia and the UAE are investing in renewable energy projects, such as solar and hydrogen, ensuring that the energy needs of future industries will be met sustainably.

·???????? These energy assets make the GCC an attractive partner for energy-intensive industries such as petrochemicals, aluminum, and cement production.

Conclusion: The GCC's Transformation into a Trade and Manufacturing Hub

?With its strategic location, growing trade ties with the Indian subcontinent, advanced logistics infrastructure, and the introduction of the India-Middle East-Europe Economic Corridor (IMEC), the GCC is well-positioned to emerge as a major hub for trade and manufacturing. The IMEC, in particular, promises to reduce trade bottlenecks and enhance connectivity between Asia, the Middle East, and Europe, ensuring that the GCC will play a pivotal role in shaping the future of global trade. By investing in industrial capabilities and modernizing its economy, the GCC could transform itself into the gateway for goods flowing between the Indian subcontinent and the rest of the world.