A Transformative Trade Partnership to Bloom Between India and Oman

India Oman

In a groundbreaking development, Indian goods worth USD 3.7 billion are poised to receive a substantial boost in Oman as both nations engage in negotiations for a Comprehensive Economic Partnership Agreement (CEPA). The recent report, titled ‘India-Oman CEPA: Gateway to Middle Eastern Markets and Beyond’ prepared by the Global Trade Reproach Initiative (GTRI), outlines the potential impact on over 83.5% of Indian exports.

Officials have expressed a commitment to expedite the negotiations, drawing parallels with the existing agreement with the UAE. In the April-September period of FY24, India recorded exports to Oman totaling USD 2 billion and imports amounting to $2.1 billion.

The CEPA aims to eliminate the existing 5% import duty on Indian goods entering Oman, including major exports like motor gasoline, iron and steel, electronics, machinery, and more. Notable beneficiaries of duty elimination encompass motor gasoline (USD 1.7 billion), iron and steel products (USD 235 million), electronics (USD 135 million), and other vital sectors. However, in a contrasting view, about 16.5% of Indian exports, valued at USD 800 million, which currently enjoy duty-free access, will not see additional benefits under the agreement.

On the other hand, Oman’s import duties range from 0 to 100%, with specific duties, and 100% duty on select items like meats, wines, and tobacco products. The reduction in import duties under the CEPA is poised to open avenues for Indian products in the Omani market, providing a competitive edge. With diverse offerings, from pharmaceuticals to technology, India is set to enhance its export potential. Simultaneously, Oman’s products, particularly in crucial sectors, stand to gain a more receptive market in India.

The CEPA is expected to foster significant growth in the Omani market, contingent on product quality improvements. Beyond economic gains, the CEPA holds strategic importance, serving as a gateway for India to strengthen its presence in Middle Eastern economies, and enhancing geopolitical ties.

Trade Potential:

  1. India’s GDP vs. Oman’s GDP: India’s GDP of USD 3.5 trillion dwarfs Oman’s GDP of USD 115 billion, presenting India as a vast consumer market.
  2. Population Dynamics: With a population of 1.4 billion compared to Oman’s 5 million, India represents a substantial market for Omani goods and services.
  3. Per Capita Income Dynamics: Despite India’s larger economy, Oman’s higher per capita income (USD 25,060) signals a demand for diversified and potentially higher-value goods and services.

The India-Oman CEPA not only promises immediate economic benefits but also signifies a strategic alliance that could reshape trade dynamics in the Middle East, fostering deeper ties between the two nations.

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