Economy
India-Oman free trade deal likely to be signed soon, say officials
Summary
- The pact, officially known as the CEPA, will likely boost Indian exports to the West Asian country by eliminating duty
NEW DELHI : The legal vetting for a proposed free trade agreement (FTA) between India and Oman is nearly complete, with the deal likely to be signed in either the coming days or after the general election, two people aware of the matter said.
"The government hopes to sign the pact before the announcement of dates for general elections, and in case it cannot be signed before the announcement, the government may nevertheless seek permission from the election commission to announce it as the FTA is in the interest of economy," said the first person mentioned above, who spoke under the condition of anonymity.
"In this case, the government may announce the finalization of negotiations and sign it even after the model code of conduct comes into force," the above-mentioned person said.
"There is also a likelihood of the announcement being made after the polls," the person added.
The model code, which comes into effect as soon as election dates are made public, bars government leaders from announcing development projects in a move to level the playing field between opposition and ruling party candidates.
The pact, officially known as the Comprehensive Economic Partnership Agreement (CEPA), will likely boost Indian exports to the West Asian country by eliminating duty, especially in petroleum products, textiles, electronics, pharmaceuticals, machinery, and iron and steel.
Reports suggest the Election Commission of India (ECI) is likely to announce the schedule for the Lok Sabha election, slated to take place in April-May, after 13 March.
Spokespersons for the commerce ministry, commerce secretary Sunil Barthwal, the commerce minister's office, the prime minister's office and Oman embassy didn't respond to emailed queries by press time.
Oman is India's third-largest export destination among Gulf Cooperation Council (GCC) countries with bilateral trade standing at $12.39 billion in FY2023, up from $5 billion in FY2019.
India's exports to Oman have increased from $2.25 billion in FY2019 to $4.48 billion in FY2023.
However, at present, over 80% of Indian exports to Oman attract an average 5% import duty.
The FTA is also expected help Oman diversify its economy away from its reliance on oil exports. By granting preferential access to Indian goods and services, Oman will benefit from India's expertise in various industries.
Meanwhile, India's merchandise imports from Oman were valued at $7.9 billion, while service services imports stood at $0.6 billion during FY23.
India is a major importer of petroleum products, Liquified Natural Gas (LNG), gaseous hydrocarbons, and chemical fertilizers from Oman.
Economic think tank the Global Trade Research Initiative (GTRI) expects India's FTA deal with Oman to benefit the South Asian country's exports of commodities like petroleum products, iron and steel products, electronics, machinery, aluminium oxide and textiles, among others.
"India can hope to radically increase its exports post the FTA (announcement) as currently, over 80% of its goods enter Oman at average 5% import duties, and there are not many trade barriers. Oman’s import duty ranges from 0 to 100% along with the existence of specific duties. 100% duty is applicable on specific meats, wines and tobacco products," GTRI said in a recent report.
"The duty elimination will aid most Indian exports, but significant growth in the Omani market, a small, middle-income economy with a $25,000 per capita income, will also depend on product quality improvements," it added.
