India and Oman have embarked on discussions to establish a free trade agreement, as reported by the Economic Times, a leading Indian financial daily. The negotiations, expected to be expedited, bear similarity to the existing agreement with the UAE, according to unnamed officials.
India navigates new economic frontiers, transitioning from a successful Comprehensive Economic Partnership Agreement (CEPA) with the UAE to commencing talks on a free trade agreement with Oman. The negotiations, mirroring the UAE model, aim to bolster trade in identified sectors, marking a strategic move in India’s economic diplomacy.
Negotiations in Fast Track
The talks, now underway, are anticipated to result in a comprehensive free trade agreement, reflecting the shared interests of India and Oman in fostering stronger economic ties. The officials involved in the process emphasize the expeditious nature of these negotiations.
Comprehensive Agreement Scope
An official source mentioned, “Discussions have started, and the agreement would be a comprehensive one.” This signals a commitment to addressing various sectors, ensuring a broad and impactful trade agreement.
Identified Trade Sectors
The Indian government has identified specific sectors with high potential for increased trade between the two nations. These sectors include petroleum products, gems and jewellery, engineering products, pharmaceuticals, cement and ceramic products, ready-made textiles, and footwear.
Trade Statistics Between India-Oman
As of April-September 2023/24, India’s exports to Oman have reached $2 billion, while imports stand at $2.1 billion, showcasing the substantial economic exchange between the two countries. These negotiations aim to further bolster these figures through a mutually beneficial trade agreement.
Insights from India-UAE Comprehensive Economic Partnership Agreement (CEPA)
The model for the India-Oman free trade agreement is expected to draw from the successful Comprehensive Economic Partnership Agreement (CEPA) already in place with the UAE. The CEPA, active since May 2022, has proven instrumental in enhancing bilateral non-oil trade.
From May 2022 to April 2023, the first 12 months of the CEPA, bilateral non-oil trade between India and the UAE reached $50.5 billion, marking a 5.8% year-on-year increase. This positive outcome establishes a promising precedent for the ongoing negotiations with Oman.
Regional Perspective: India-GCC Relations
In a broader regional context, India’s Commerce and Industry Minister Piyush Goyal highlighted the Gulf Cooperation Council (GCC)’s interest in resuming negotiations on a free trade agreement with India. This underscores the growing economic collaboration between India and the Gulf nations.
Negotiations for the India-Gulf Cooperation Council (GCC) Free Trade Agreement (FTA) have a significant history. The journey commenced with the signing of a Framework Agreement on Economic Cooperation between the Republic of India and the Gulf Cooperation Council on 25th August 2004. This foundational agreement outlined the commitment of both parties to explore avenues for extending and liberalizing trade relations, setting the stage for discussions on the feasibility of a comprehensive Free Trade Agreement.
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The negotiations entered an active phase, with the first two rounds held in 2006 and 2008. However, the anticipated third round did not materialize as the GCC deferred negotiations with all countries and economic groups. Presently, the GCC is in the process of reviewing its negotiations with various entities. Despite this delay, ongoing efforts persist at bilateral and multilateral forums to facilitate the prompt resumption of negotiations.
As India progresses with the free trade agreement talks with Oman, these initiatives contribute to the overarching goal of strengthening economic cooperation and promoting shared prosperity.
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