- Negotiations for a Comprehensive Economic Partnership Agreement (CEPA) between India and Oman are moving quickly, with the agreement scheduled to be concluded in January 2024.
- The second round of discussions recently finished in Muscat, signalling that both countries are anxious to finalise the agreement.
India-Oman Trade Relations
- Export Destination: Oman is India’s third-largest export destination in the Gulf Cooperation Council (GCC), making the FTA essential for increasing Indian exports.
- Current Trade Dynamics: Currently, more than 80% of Indian goods enter Oman with an average import duty of 5%, and the FTA hopes to lower these obstacles.
Potential FTA Advantages
- Increased Exports: The agreement is projected to improve Indian exports in a variety of areas, including petrol, iron and steel, electronics, and machinery.
- Key Export Sectors: The abolition of duties is expected to assist industries such as motor petrol, iron and steel goods, electronics, machinery, textiles, plastics, boneless meat, essential oils and automobiles.
Economic Background and Strategic Importance
- Oman’s Economy: With a GDP of over USD 115 billion and a greater per capita income than India, Oman provides a market for diverse and higher-value Indian goods and services.
- Bilateral Trade Growth: Bilateral trade between India and Oman reached USD 12.39 billion in 2022-23, with both Indian exports and imports increasing significantly.
- Oman’s Position: India values Oman’s strategic location in the Arabian Gulf region, with vital ports along the Arabian Sea and the Gulf of Oman.
- Historical Ties: Oman’s royal family’s longstanding relationship with India has produced strong bilateral relations, with a sizable Indian community contributing to these ties.
Strategic Partnership between India and Oman
- Defence and security: The collaboration, which was strengthened by a Memorandum of Understanding signed in 2005, includes joint exercises and marine security cooperation.
- Bilateral trade and joint ventures are important foundations of cooperation, with significant Indian investment in Oman.
Collaborations in the Future and Regional Stability
- Space and Rare Earth Metals: Opportunities for collaboration in space exploration and rare earth metals exploration abound.
- Oman could play an important part in India’s envisioned connectivity corridors and infrastructure projects in West Asia.
Conclusion
- Common Interests: The growing India-Oman relationship, distinguished by mutual respect and common interests, places Oman as India’s gateway to West Asia.
- Broader Engagement: As India attempts to broaden its global reach, particularly in West Asia, Oman’s strategic importance and balanced foreign policy position it as a critical ally in the region.
Source: https://economictimes.indiatimes.com/news/economy/foreign-trade/india-oman-free-trade-agreement-likely-to-be-inked-next-month-official/articleshow/106296361.cms#:~:text=It%20may%20be%20signed%20in,Cooperation%20Council%20(GCC)%20countries.