Discussions for the proposed Free Trade Agreement (FTA) between India and Oman are progressing rapidly, with both sides optimistic about concluding the pact soon, according to Indian Ambassador to Oman, Mr. Amit Narang. The agreement, officially referred to as the Comprehensive Economic Partnership Agreement (CEPA), is poised to significantly enhance bilateral trade and investment by removing duties on key exports from India to Oman. These exports include crucial sectors such as petroleum products, textiles, electronics, pharmaceuticals, machinery, and iron and steel.

At a recent event organized by the Federation of Indian Chambers of Commerce & Industry (Ficci), Ambassador Narang emphasized the transformative potential of the CEPA in strengthening the economic ties between India and Oman. By eliminating tariffs on a broad range of goods, the agreement is expected to provide a substantial boost to the bilateral trade volume, opening up new opportunities for businesses in both nations.

Enhancing Direct Shipping Links

A critical point of discussion during the negotiations has been the need to improve direct shipping links between India and Oman. Ambassador Narang pointed out that a significant portion of Indian exports to Oman currently pass through the United Arab Emirates (UAE), which distorts the actual bilateral trade figures between the two countries. By enhancing direct shipping routes, it is expected that trade costs could be reduced, leading to a more accurate representation of India-Oman trade and potentially higher trade volumes.

Despite the promising outlook for the CEPA, it is noted that India-Oman bilateral trade, which had crossed US$ 12 billion in the fiscal year 2022-23, has moderated to US$ 8 billion in FY24. This reduction is largely attributed to fluctuations in the value of hydrocarbons, a significant component of trade between the two countries. However, with the potential implementation of direct shipping links and the CEPA, these figures could see a positive correction in the coming years.

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Broader Engagement with the GCC

The discussions surrounding the India-Oman CEPA also come in the context of India’s broader strategic engagement with the Gulf Cooperation Council (GCC). Indian Ambassador to the UAE, Mr. Sunjay Sudhir, highlighted that India plans to upgrade its political engagement with the GCC soon. This upgraded engagement is expected to unlock further opportunities for cooperation in emerging sectors such as artificial intelligence (AI), healthcare, and space technology. These sectors represent the future growth areas in which both India and the Gulf countries, including Oman, are looking to invest and collaborate.

The CEPA between India and Oman, once finalized, will not only serve to strengthen the economic ties between the two nations but also reinforce India's strategic presence in the Gulf region. As both countries continue to work towards finalizing the agreement, the potential benefits in terms of trade, investment, and broader economic cooperation are vast. The successful conclusion of the India-Oman CEPA could serve as a model for future trade agreements between India and other GCC nations, fostering deeper economic integration across the region.

This agreement is eagerly awaited by businesses and policymakers alike, who view it as a critical step in enhancing India’s economic footprint in the Gulf region and bolstering Oman’s trade relations with one of its key partners. The coming months will be crucial in determining the final shape of the CEPA, with significant implications for the economic futures of both India and Oman.

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