India excludes liquor, cigarettes from duty concessions in Oman FTA talks
NEW DELHI : India has excluded over 100 product categories, including liquor and cigarettes, from customs duty concessions in the ongoing Free Trade Agreement (FTA) negotiations with Oman, sources revealed.
While the FTA negotiations have been concluded, Oman has requested revisions to its market access offers for certain products. Both sides have addressed three to four issues raised by Oman, with sources indicating that any adjustments would likely be minimal.
The agreement is expected to provide India with enhanced market access for approximately 98% of its goods in Oman, along with substantial opportunities in the services sector.
“There could be about 125-130 tariff lines (or product categories), where we have not asked for duty concessions and that included goods like liquor, and cigarettes,” they added.
On January 14, India and Oman conducted the fifth round of negotiations for the Comprehensive Economic Partnership Agreement (CEPA), aimed at strengthening bilateral economic ties.
The formal negotiations for the agreement began in November 2023. Oman’s import duties range from 0 to 100 percent, with specific duties applied to products such as certain meats, wines, and tobacco, which attract the maximum 100 percent duty.
Industry sources suggest that India should refrain from extending duty concessions on petrochemical products, a key demand from Oman.
Indian petrochemical industry which comprises both large public sector units and private players have raised their serious concerns and requested the government not to accede to this demand of Oman, they said.
“In petrochemical sector, feedstock constitutes a significant portion (about 65-70 per cent) of the total product cost such as Polyethylene (PE), Polypropylene (PP), Polyvinyl Chloride (PVC), Polyethylene Terephthalate (PET) etc. Therefore, feedstock pricing makes a critical determinant of overall competitiveness in the petrochemical industry,” the industry sources said.
They added that Oman has a distinct feedstock cost advantage due to its abundant natural resources and has a significant exportable surplus of petrochemical products with minimal domestic demand.
“Any tariff concessions to Oman would lead to an influx of low cost petrochemical imports, adversely affecting the Indian petrochemical industry,” they said.
Oman is the third largest export destination among the Gulf Cooperation Council (GCC) countries.
According to the think tank GTRI (Global Trade Research Institute), Indian goods worth $3.7 billion like gasoline, iron and steel, electronics, and machinery will get a significant boost in Oman, once both sides reach a comprehensive free trade agreement.
Currently, over 80 per cent of its goods enter Oman at an average of 5 per cent import duties, a GTRI report has said.
While India has a comparable trade agreement already with another GCC member, the UAE, which came into force in May 2022. On the imports front, India’s merchandise imports from Oman decreased to $4.5 billion in 2023-24, down from $7.9 billion in 2022-23. Key imports include petroleum products and urea, which together account for over 70% of total imports. Other significant imports are propylene and ethylene polymers, pet coke, gypsum, chemicals, and iron and steel.
Bilateral trade between the two countries also declined, falling to $8.94 billion in 2023-24 from $12.39 billion in the previous fiscal year. India’s exports to Oman stood at $4.42 billion in the last fiscal year.
In such trade agreements, trading partners typically aim to significantly reduce or eliminate customs duties on the majority of goods exchanged between them.