Oman and India accelerate talks on trade deal

ANI/PIB via Reuters Connect

• Third round due next week
• Bilateral trade hit $12.4bn
• ‘Swift conclusion’ sought

Oman and India have scheduled a third round of talks next week as they seek to complete a free trade agreement.

The negotiations, which began in late November in New Delhi, are “progressing well” with two rounds completed in a matter of weeks, according to officials.

Bilateral trade reached $12.4 billion in the financial year 2022-23.

Oman is the third largest export market for India in the GCC. New Delhi’s exports to the sultanate have doubled since 2018-19, standing at nearly $4.5 billion in 2022-23. They make up 6 percent of total imports to Oman.

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The UAE has had a comprehensive economic partnership agreement (Cepa) with India in place since May 2022. Indian exports rose by 14 percent in the first quarter after the Emirati deal was signed. 

Muscat – which imposes an average of 5 percent import duty on over 83 percent of India’s goods – will be looking for a similar fillip from a Cepa with New Delhi, according to a Middle East Briefing report from consultancy Dezan Shira & Associates.

The trade negotiations follow a trip to India in December by Sultan Haitham bin Tariq. He is the first Omani ruler to visit the country since 1997.

Global Trade Research Initiative (GTRI), an Indian think tank, calculates that Indian exports to Oman worth $3.7 billion, such as gasoline, iron and steel, electronics and machinery, would get a significant boost from the free trade deal.

It added that about $800 million of goods already enter Oman duty-free including basic foodstuffs and medicine and will be unaffected by the deal.

GTRI said India was aiming for a “swift conclusion” to the negotiations, replicating the fast-track strategy it used with the UAE, Australia and the UK.

The two countries’ commerce ministers, Piyush Goyal of India and Qais bin Mohammed Al Yousef of Oman, called for an “early conclusion” to their talks last month.

But trade experts say customs duty on petrochemical products could prove a sticking point – particularly on polypropylene and polyethylene, primarily used in the plastics industry.

“Some stakeholders in both the public and private sectors within India oppose granting duty concessions on these products,” said the Middle East Briefing report.

“Their argument centres around Oman allegedly providing substantial subsidies to its industry for the raw materials used in the production of these petrochemical products.” 

Polypropylene and ethylene polymers account for $383 million of Oman’s exports to India, it added.

GTRI estimates that there are more than 6,000 India-Oman joint ventures in operation, with an investment of over $7.5 billion. Indian companies are leading investors at Sohar and Salalah free zones in Oman.

The think tank added: “The agreement’s true value lies in its potential to open doors for India in the Middle East, fostering economic and strategic ties in a region of critical importance.”