The pact, officially known as the Comprehensive Economic Partnership Agreement (CEPA), will boost Indian exports to the West Asian country by eliminating duties, especially on petroleum products, textiles, electronics, pharmaceuticals, machinery, and iron and steel.

“All issues have been sorted out. We are looking at good benefits in services. The deal with Oman will help us in building a holistic ecosystem for a green energy-efficient manufacturing base,” said one of the persons mentioned above, who asked not to be named.

“Strategically, the deal is very important. It will allow Indian companies to set up manufacturing plants in Oman to export green products,” the person added.

The general elections start on 19 April and counting of votes starts on 4 June.

Oman is India’s third-largest export destination among Gulf Cooperation Council (GCC) countries with bilateral trade standing at $12.39 billion in FY2023, up from $5 billion in FY2019.

India’s exports to Oman have increased from $2.25 billion in FY2019 to $4.48 billion in FY2023.

However, at present, over 80% of Indian exports to Oman attract an average 5% import duty.

Oman’s import duties range from 0% to 100%, along with other specific duties. A 100% duty applies to specific meats, wines, and tobacco products.

After the signing of the deal, India aims to substantially increase its exports to the West Asian country.

Issues related to labour mobility have also been covered under the agreement.

“Investments will go both ways. We expect significant growth across 7,000 trade lines (products) that currently attract 5% duty in Oman,” the person added.

There are plans for Indian companies to process aluminium and steel in Oman, before exporting them to third countries, due to lower energy costs in the West Asian country.

“After the FTA, big Indian business conglomerates will set up their units and export green goods to European markets,” the person mentioned above added.

“The presence of over 6,000 India-Oman joint ventures, with substantial Indian investment in Oman’s Sohar and Salalah Free Zones, underscores the depth of economic engagement. Moreover, the FTA serves as a strategic lever for India to expand its influence and strengthen relationships within the broader Middle Eastern region,” said Ajay Srivastava, founder of the economic think tank Global Trade Research Initiative (GTRI).

“This agreement will not only boost trade and investment opportunities but also contribute to India’s geopolitical objectives, offering a balanced approach to its trade relations with Oman,” Srivastava added.

The FTA is also expected to help Oman diversify its economy away from its reliance on oil exports. By granting preferential access to Indian goods and services, Oman will benefit from India’s expertise in various industries.

India’s merchandise imports from Oman were valued at $7.9 billion, while service services imports stood at $0.6 billion during FY23.

India is a major importer of petroleum products, Liquified Natural Gas (LNG), gaseous hydrocarbons, and chemical fertilizers from Oman.

Spokespersons of the commerce ministry, the commerce secretary and the Oman embassy didn’t respond to emailed queries.

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Published: 07 Apr 2024, 06:17 PM IST