Legal scrubbing of India-Oman FTA underway

NEW DELHI : The proposed India-Oman free trade agreement (FTA) that could boost Indian exports into the West Asia region is likely to be announced soon as pending issues have been settled and a legal scrubbing of the deal is underway, a person aware of the development told.

While Oman is looking to diversify its economy by reducing its dependence on the oil and gas sector, India is looking for greater market access into diverse markets for its pharmaceuticals and textiles to technology and agricultural products. Currently, India relies on only half a dozen countries opening it up to external shocks.

“The India-Oman FTA should be announced soon as most of the issues have been settled and the deal is undergoing legal scrubbing. Once that is done, the leadership will take a decision on its announcement. The commerce ministry intends to sign the pact before the general elections,” the person quoted above stated.

This would potentially be India’s second FTA with a West Asian country after signing a trade deal with the UAE. India also furthered its economic integration with UAE by completing a Bilateral Investment Treaty (BIT) with UAE earlier this month.

Global Trade Research Initiative (GTRI) said that the India-Oman CEPA, while offering direct economic benefits through import duty reductions, also serves a larger strategic role in India’s foreign policy.

“While acknowledging the limitations set by Oman’s smaller economic size and population, the agreement’s true value lies in its potential to open doors for India in the West Asea, fostering economic and strategic ties in a region of critical importance,” GTRI said.

In FY23, India’s merchandise exports to Oman were valued at $4.5 billion. India supplies 6.6 per cent of Oman’s imports. Petroleum products with $ 2.2 billion account for 49 per cent of India’s exports. Motor Gasoline or petrol with $1.7 billion is the largest petroleum product.

Over 83.5 per cent of India’s goods exports, valued at $3.7 billion, currently face a 5 per cent import duty in Oman. With the new Free Trade Agreement (FTA), these products, including major exports like motor gasoline, Iron, Steel and products, Electronics, Machinery, Aluminum oxide and Textiles will benefit from duty elimination, GTRI said.

However, about 16.5 per cent of Indian exports to Oman, worth $800 million and already entering duty-free, will not see additional benefits from the FTA. These include wheat, Basmati rice, Fruits, vegetables, medicines, fish, tea, coffee.