India-Oman Free Trade Agreement (FTA) is on the brink of being signed, pending final legal scrutiny, bringing with it the promise of bolstered economic ties between the two nations.
Sources familiar with the matter have indicated that all substantive issues concerning the agreement have been resolved, leaving only the procedural step of legal scrubbing before the pact can be finalized.
The imminent signing of the India-Oman Comprehensive Economic Partnership Agreement (CEPA) is strategically timed, with efforts underway to conclude the agreement prior to India's forthcoming general elections, which are expected to be announced imminently.
The proposed CEPA holds significant importance for India, particularly in light of Oman's status as the third-largest export market within the Gulf Cooperation Council (GCC) nations. Bilateral trade between India and Oman has witnessed a substantial uptick in recent years, with trade volumes surging from $5.4 billion in 2020-21 to $12.39 billion in 2022-23. During this period, India's exports to Oman reached $4.48 billion, while imports stood at approximately $8 billion.
The potential for further growth in trade between the two nations is considerable, with over 80% of India's exports to Oman currently subject to a 5% duty, a barrier that is poised to be eliminated once the CEPA comes into effect, as highlighted by research conducted by the Global Trade Research Institute (GTRI).
A diverse array of export items, including motor gasoline, electronics, textiles, and essential oils, stands to benefit from reduced tariffs under the agreement. Meanwhile, India's imports from Oman, predominantly comprising petroleum products and urea, are also expected to see advantageous tariff adjustments.
Negotiations surrounding the FTA progressed swiftly, buoyed by mutual economic interests. Formal talks commenced in November 2023, with several key issues resolved within the initial rounds of negotiations. The state visit of Oman's ruler, Sultan Haitham bin Tarik, in December 2023 prompted discussions, culminating in the adoption of the "India-Oman Joint Vision: A Partnership for the Future".
Following extensive consultations with industry stakeholders in January 2024, the Commerce Department finalized the deal, paving the way for its signing.
India-Oman FTA holds the potential for strategic dividends, as it could serve to fortify India's ties with the Middle East region, given Oman's significant role within the GCC.
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