India is eyeing a trade agreement with Oman to diversify its exports and bolster economic ties with the West Asia region. This move follows a successful trade deal signed with the United Arab Emirates (UAE) last year, as a recent research study reported. The proposed Comprehensive Economic Partnership Agreement (CEPA) between India and Oman holds great potential for both countries.
According to the research report by the Global Trade Research Initiative (GTRI), India’s exports of petroleum, steel, electronics, and textiles products could see a significant boost with the implementation of the trade deal. This is crucial for India, especially amid the recent slowdown in goods exports due to high-interest rates and geopolitical tensions in the western markets, which have adversely affected labor-intensive sectors.
Beyond the economic benefits, the CEPA also carries strategic importance for India, serving as a gateway to strengthen its presence in West Asia. With Oman’s higher per capita income, there is potential demand for diversified and high-value Indian goods.
However, the trade agreement faces challenges and opportunities due to the considerable difference in GDPs and populations between India and Oman. GTRI emphasizes that India should not agree to stop preferential treatment to domestic suppliers in the government procurement chapter, as it serves as a vital policy tool to incentivize domestic producers.
India might consider more flexible rules of origin for Oman to expedite the negotiation process, given the country’s reliance on exporting raw materials and intermediates crucial for India’s industries, such as chemicals, electronics, and synthetic textiles.
Additionally, India should push for fast-track approval of Indian pharmaceutical products that have already received regulatory clearance from the US Food and Drug Administration (USFDA), the UK drug regulator, and the European Medicines Agency.
Regarding current trade figures, India’s merchandise exports to Oman in FY23 were valued at $4.5 billion, with services exports estimated at $2.8 billion. Conversely, India’s merchandise imports from Oman amounted to $7.9 billion, with services imports valued at $0.6 billion.
As India’s trade talks with Oman gain momentum, it is expected that this trade deal will foster stronger economic relations, expand market access, and create new opportunities for both nations.
