Negotiations for an extensive Free Trade Agreement (FTA) between India and Oman are rapidly advancing as officials from India's Department of Commerce are currently in Muscat engaged in discussions. Insiders familiar with the situation suggest that the Department of Commerce has set an internal deadline to finalize the agreement by the month's end. This development holds particular significance as India and the six-nation Gulf Cooperation Council (GCC) comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) have faced delays in negotiations for over a year, primarily due to differing terms of reference, notably with Saudi Arabia. Successful trade talks would make Oman the second GCC member, after the UAE, to formalize an FTA with India. Additionally, the anticipated agreement is poised to further enhance India's economic connections with West Asia.
In February 2022, India and the UAE concluded an expansive economic partnership agreement (CEPA). Sources indicate that the structure of the India-UAE deal is expected to be a blueprint for the forthcoming trade pact with Oman. Oman, currently ranked as India's 29th largest trading partner, has witnessed substantial growth in bilateral trade. The trade figures surged from $3.15 billion in FY22 to $4.48 billion in FY23, marking a significant 42 percent year-on-year increase. Notably, almost half of India's exports in the previous fiscal year comprised petroleum products, particularly motor gasoline.
The Global Trade Research Initiative (GTRI), a Delhi-based think tank, has highlighted that India stands to considerably enhance its exports following the implementation of the Free Trade Agreement (FTA). Currently, more than 80 percent of Indian goods enter Oman, facing an average import duty of 5 percent, with minimal trade barriers. GTRI mentioned, "Over 83.5 percent of India’s goods exports, valued at $3.7 billion, currently encounter a 5 percent import duty in Oman. With the new FTA, these products, including major exports like motor gasoline, iron and steel, electronics, machinery, and textiles, among other items, will benefit from the elimination of duties". It further explained that approximately 16.5 percent of India’s exports to Oman already enter duty-free, hence won't see additional benefits from the FTA. Imports from West Asian nations surpass exports, experiencing a 15.6 percent increase to $7.91 billion in FY23.