India and Oman are on the brink of settling a Free Trade Agreement (FTA) by January 2024, according to a senior government official taking part in the negotiations. The Comprehensive Economic Partnership Agreement (CEPA) discussions are progressing swiftly, with the second round of talks recently wrapped up in Muscat.
This impending agreement holds significant promise, particularly for India, as Oman ranks as its third-largest export destination within the Gulf Cooperation Council (GCC) countries. Currently, over 80% of Indian goods entering Oman face an average of 5% import duty, making the FTA a strategic move to eliminate these trade barriers.
Negotiations have made substantial progress, with officials finalizing the text for most chapters. The FTA is expected to boost Indian exports to Oman significantly. A report by the Global Trade Research Initiative (GTRI) estimates that Indian goods worth 3.7 billion will experience a surge in Oman’s market after the comprehensive free trade agreement. Sectors anticipated to witness growth include motor gasoline (exports worth 1.7 billion), iron and steel products (exports worth 235 million), electronics (135 million), machinery ( 125 million), textiles ( 110 million), plastics (64 million), boneless meat (50 million), essential oils (47 million), and motor cars (28 million).
India’s proactive approach to fostering economic partnerships in the Gulf region is evident with the implementation of a trade agreement with the UAE in May 2022. Both Oman and the UAE are integral members of the Gulf Cooperation Council (GCC), showcasing India’s commitment to enhancing economic collaboration in the region.
Ajay Srivastava, Co-Founder of GTRI, highlighted Oman’s substantial GDP of $115 billion and a population of 5 million, coupled with a higher per capita income (25,060) compared to India’s (2,370). This contrast suggests a potential demand in Oman for more diversified and possibly higher-value goods and services, creating an opportunity for India to tap into this burgeoning market.
Bilateral trade between India and Oman reached USD 12.39 billion in the fiscal year 2022-23, marking a substantial increase from $2.25 billion in 2018-19. India’s exports to Oman surged to $4.48 billion during the same period, underlining the growing economic collaboration between the two nations. Imports from Oman to India totaled $8 billion in the last fiscal year.
As the global economic landscape evolves, this imminent Free Trade Agreement between India and Oman signifies a milestone in their bilateral relations, contributing to the broader narrative of fostering stronger economic ties across international borders. The potential for mutual growth and prosperity is palpable, with the forthcoming agreement expected to unlock new avenues for trade and cooperation between these two dynamic nations.
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