Mumbai: India has proposed a free trade agreement with member countries of the Gulf Co-operation Council, finance minister P Chidambaram said.

"We are in the process of negotiating an FTA with Gulf Cooperation Council (GCC)... The first round of meeting between India and GCC had taken place in March 2006," he told a meeting of representatives of Gulf countries.

Chidambaram said India has already signed a bilateral investment protection agreements with six Gulf countries - Oman, Qatar, Kuwait, Yemen, Bahrain and Saudi Arabia - and four more are in the pipeline. "We hope to take it further," he said, adding that the Arab countries should take advantage of India''s cost competitiveness by sourcing more manufactured items.

Gulf countries have gained immensely by high oil prices and these countries can explore investment prospects in India which is becoming a major global manufacturing hub.

"We believe India has competitive advantage in many areas especially in manufacturing and services," he said.

The country is fast becoming a hub for manufacturing particularly, steel petroleum refinery, automobiles and auto parts, textiles, leather and leather products and pharmaceuticals, he said.

Chidambaram said these trade and investments could also help foster closer economic ties between India and the Arab world. He also assured the investors of hassle-free clearances for their projects. "The red-tape is out and red carpet is in," he said.