India-Oman Trade Deal Overview
Amid increasing trade restrictions in the US and the European Union, India signed a trade deal with Oman on December 18 to bolster its exports in West Asia. This aligns with India's strategy to pursue more free trade agreements (FTAs) to secure new markets.
Trade Context and Strategy
- India faces trade restrictions due to US tariffs and EU's carbon tax.
- The deal with Oman fits New Delhi’s broader strategy to expand free trade agreements.
- Indian exporters aim for better market access in the Arab region where standards are less stringent than the EU.
Trade with Oman and GCC
- Despite not securing a deal with the Gulf Cooperation Council (GCC), India now has agreements with Oman and the UAE.
- Oman's strategic location could serve as a hub for Indian products in the region and Africa.
- Oman's total annual imports are approximately $40 billion, with a focus on machinery goods and energy exports.
Market Impact and Product Focus
- Oman’s FTA with the US offers duty-free access for several products, influencing India's trade strategy.
- India aims to boost exports of gems and jewellery, which face high tariffs.
- Indian exports to Oman, primarily machinery and parts, have doubled from $3 billion to $6 billion over the past five years.
- Key Indian exports include machinery, aircraft, rice, iron and steel articles, beauty and personal care products, and ceramics.
Competitive Advantages and Challenges
- Oman offers zero-duty access on 98% of its tariff lines, enhancing the competitiveness of Indian industrial exports.
- Sustained growth depends on quality improvements and product differentiation in Oman's market.
Sector-Specific Gains
- India could gain significantly in the services sector, with Oman importing $12.52 billion worth of global services.
- India’s share in Oman’s global service imports stands at 5.31%.
- Oman has offered commitments in various sectors, including computer services, business, audio-visual services, research, education, and health.
Enhanced Mobility Framework
- The CEPA introduces an enhanced mobility framework for Indian professionals.
- Oman increased the quota for Intra-Corporate Transferees from 20% to 50%.
- Duration of stay for Contractual Service Suppliers extended from 90 days to two years, with a possible two-year extension.
