India and Oman Fast-Track Free Trade Agreement (FTA) Negotiations

  • 28 Dec 2023

India and Oman are expediting discussions for a comprehensive free trade agreement (FTA), with officials from the Department of Commerce currently in Muscat for negotiations.

Key Points

  • Fast-Track Negotiations: Officials from India's Department of Commerce are in Muscat for accelerated negotiations on a proposed comprehensive free trade agreement (FTA) between India and Oman. An internal deadline has been set to finalize the deal by the end of the month.
  • Strategic Significance: The development gains prominence as India and the Gulf Cooperation Council (GCC), comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, have faced delays in negotiations for over a year, primarily due to differences in terms of reference, especially with Saudi Arabia.
  • Oman's Potential FTA with India: If successful, Oman will become the second GCC member, after the UAE, to establish an FTA with India. The agreement is anticipated to strengthen India's economic ties with West Asia.
  • Replication of India-UAE Agreement: The trade pact with Oman is expected to replicate the comprehensive economic partnership agreement (CEPA) signed between India and the UAE in February 2022.
  • Robust Bilateral Trade Growth: Bilateral trade between India and Oman has witnessed robust growth, surging from $3.15 billion in FY22 to $4.48 billion during FY23, marking a 42% year-on-year increase.
  • Top Trading Partner Status: Oman currently ranks as India's 29th largest trading partner.
  • GTRI Analysis: A report by the Delhi-based think tank Global Trade Research Initiative (GTRI) suggests that India's exports to Oman could see a significant boost post-FTA, as over 80% of Indian goods entering Oman face a 5% import duty.
  • Duty Elimination Benefits: Major Indian exports like motor gasoline, iron and steel, electronics, machinery, and textiles stand to benefit from duty elimination under the proposed FTA.
  • Imports and Exports Dynamics: Imports from West Asian nations, including Oman, saw a 15.6% increase to $7.91 billion in FY23. Key inbound shipments include petroleum products and urea, comprising approximately three-fourths of total imports.
  • Strategic Role of CEPA: The India-Oman CEPA is seen not only as an avenue for direct economic benefits but also as a strategic move in India's foreign policy, fostering economic and strategic ties in the strategically crucial Middle East region.