India-Oman trade ministers to review progress of FTA talks

India and Oman will review the progress of talks for the proposed free trade agreement (FTA) between the two countries during the visit of Commerce and Industry Minister Piyush Goyal to Muscat this week, an official statement said on Sunday.

Though the negotiations for the proposed agreement were concluded, Oman has sought revision of its market access offers on some products.

On January 14, India and Oman held the fifth round of talks for the agreement, which is aimed at boosting bilateral economic ties.

The negotiations for the agreement, officially dubbed as Comprehensive Economic Partnership Agreement (CEPA), formally began in November 2023.

In such agreements, two trading partners either significantly reduce or eliminate customs duties on a maximum number of goods traded between them.

They also ease norms to promote trade in services and attract investments."The talks on India-Oman CEPA which are at an advanced stage are likely to get further impetus during the visit.

Both sides are negotiating and exploring a commercially significant, balanced, equitable, ambitious and mutually beneficial CEPA," the commerce ministry said.

Goyal will also attend the joint commission meeting with Oman's Minister of Commerce, Industry and Investment Promotion Qais bin Mohammed bin Moosa al-Yousef during January 27-28.

A business delegation is accompanying the Minister for the Joint Business Council meeting. On the sidelines, Goyal is also expected to meet Sultan bin Salim Al Habsi, Minister of Finance and Chairperson of the Ministerial Committee for CEPA; and Sheikh Ali bin Masoud Al Sunaidy, President, Public Authority for Special Economic Zones and Free Zones (OPAZ).

Oman is the third largest export destination among the Gulf Cooperation Council (GCC) countries for India. India already has a similar agreement with another GCC member UAE which came into effect in May 2022.

The bilateral trade has declined to $8.94 billion (exports $4.42 billion and imports $4.5 billion) in 2023-24 from $12.39 billion (exports $4.47 billion and imports $7.91 billion) in 2022-23.

India's key imports are petroleum products and urea. These account for over 70 per cent of imports. Other key products are propylene and ethylene polymers, pet coke, gypsum, chemicals, and iron and steel.

According to the think tank GTRI (Global Trade Research Institute), Indian goods worth $3.7 billion like gasoline, iron and steel, electronics, and machinery may get a significant boost in Oman, once both sides reach a comprehensive free trade agreement.

These goods at present face a 5 per cent import duty in Oman. Oman's import duty ranges from 0 to 100 per cent along with the existence of specific duties. A duty of 100 per cent is applicable on specific meats, wines and tobacco products.

Reduction in import duties under the CEPA will allow Indian products to enter the Omani market at competitive prices. With a population of 1.4 billion compared to Oman's 5 million, India represents a vast consumer market for Oman.

However, Oman's higher per capita income ($25,060) compared to India's ($2,370) could mean a demand for more diversified and possibly higher-value goods and services in Oman, which India could aim to supply, the GTRI has said.