India and Oman fast-track FTA negotiations in boost to economic ties
A team of officials from India’s Department of Commerce is currently in Muscat, engaged in negotiations for a comprehensive free trade agreement (FTA) with Oman. The department has set an internal deadline to finalize the deal by the end of the month.
Significance Amidst GCC Challenges
This development gains significance as negotiations between India and the Gulf Cooperation Council (GCC) have faced obstacles, particularly with Saudi Arabia, delaying progress for over a year. If successful, Oman would become the second GCC member, after the UAE, to sign an FTA with India.
Mirroring the UAE Model
Insiders suggest that the FTA with Oman is expected to follow the template of the comprehensive economic partnership agreement (CEPA) signed between India and the UAE in February 2022. This approach is seen as a strategic move to strengthen economic ties with West Asia.
Trade Growth and Partnership Dynamics
Oman currently stands as India’s 29th largest trading partner, with bilateral trade showing robust growth. From $3.15 billion in FY22, trade has surged to $4.48 billion during FY23, marking a substantial 42% YoY increase.
Key Trade Statistics and Projections
- In the previous fiscal year, petroleum products, especially motor gasoline, comprised nearly half of India’s exports to Oman.
- A report from the Delhi-based Global Trade Research Initiative (GTRI) suggests that the FTA could significantly boost India’s exports to Oman.
- Over 80% of India’s goods currently face a 5% import duty in Oman, totaling $3.7 billion. The FTA aims to eliminate these duties, benefiting major exports like motor gasoline, iron and steel, electronics, machinery, and textiles.
Import Dynamics and Future Prospects
- Imports from West Asian nations, including Oman, witnessed a 15.6% increase to $7.91 billion in FY23.
- Key imports include petroleum products and urea, constituting nearly three-fourths of the total imports.
Important Questions Related to Exams
Q: What is the current focus of Indian officials in Muscat?
A: Officials from India’s Department of Commerce are in Muscat negotiating a comprehensive free trade agreement (FTA) with Oman.
Q: Why is the India-Oman FTA significant?
A: It aims to strengthen economic ties with West Asia and, if successful, Oman would be the second GCC member after the UAE to sign an FTA with India.
Q: How has bilateral trade between India and Oman performed recently?
A: Bilateral trade has surged to $4.48 billion in FY23, marking a substantial 42% year-on-year increase.
Q: What are the key components of India’s exports to Oman?
A: Petroleum products, particularly motor gasoline, constitute nearly half of India’s exports to Oman.
Q: What potential benefits does the FTA offer for India’s exports to Oman?
A: The FTA aims to eliminate 5% import duties on over 80% of India’s goods in Oman, potentially boosting major exports like motor gasoline, iron and steel, electronics, machinery, and textiles