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India-Oman free trade agreement set to boost exports, fuelling economic growth
Industry News- Dec 15,23
The report, titled "India-OMAN CEPA: Gateway to Middle Eastern Markets and Beyond," by the Global Trade Reproach Initiative (GTRI), outlines the potential impact of the agreement.
A report released revealed that once India and Oman finalise their comprehensive free trade agreement, more than 83.5% of Indian goods valued at $3.7 billion, including gasoline, iron and steel, electronics, and machinery, will experience a substantial uplift in Oman. Currently facing a 5% import duty in Oman, these goods could benefit from duty elimination under the proposed India-Oman Comprehensive Economic Partnership Agreement (CEPA).
The report, titled "India-OMAN CEPA: Gateway to Middle Eastern Markets and Beyond," by the Global Trade Reproach Initiative (GTRI), outlines the potential impact of the agreement. The CEPA negotiations aim to significantly reduce or eliminate customs duties on a wide array of goods between the two nations.
Upon the implementation of the trade agreement, products such as motor gasoline, iron and steel items, electronics, machinery, aluminium oxide, textiles, alumina calcined, plastics, boneless meat, essential oils, and motor cars stand to gain from duty elimination. The report estimates that these goods, which constitute major Indian exports, could experience substantial growth.
However, around 16.5% of Indian exports to Oman, totalling $800 million and comprising items with existing duty-free access, may not see additional benefits from the agreement. This category includes items like wheat, basmati rice, fruits, vegetables, medicines, fish, tea, coffee, among others.
Ajay Srivastava, Co-Founder of GTRI, emphasised that while duty elimination will benefit most Indian exports, sustained growth in Oman's market will depend on improving product quality. Srivastava expressed optimism about India significantly increasing its exports to Oman, especially as over 80% of Indian goods currently face an average 5% import duty upon entry.
The report also highlighted Oman's import duty structure, ranging from 0 to 100%, with specific duties applicable to certain items like meats, wines, and tobacco products at a 100% duty rate.
In the fiscal year 2022-23, India imported goods worth $7.9 billion from Oman, with petroleum products and urea constituting 73% of the imports. The report noted that raw materials and industrial inputs, such as propylene and ethylene polymers, pet coke, gypsum, chemicals, iron and steel, and unwrought aluminum, could benefit from tariff elimination under the FTA.
On the services side, the report pointed out that in 2022, India's service exports to Oman were approximately $2.8 billion, while imports were $0.2 billion. It suggested that India could seek increased market access for business services, computer and information services, and negotiate priority visas for its professionals on short-term assignments in Oman.
Furthermore, the report highlighted the potential for India to request track approval for its pharmaceutical products registered with USFDA, MHRA, and EMA to provide greater market access for its pharma products in Oman.
In terms of the broader economic landscape, the report emphasised the strategic importance of the CEPA for India. It highlighted the significant difference in GDP between India ($3.5 trillion) and Oman ($115 billion), underscoring India's more extensive and diverse economy. Despite this, Oman's higher per capita income ($25,060) compared to India's ($2,370) could drive demand for more diversified and higher-value goods and services from India.
Srivastava suggested that Oman could utilise the CEPA to diversify its economy, reducing reliance on the oil and gas sectors, and gaining access to India's educational and technological expertise to develop its human resources.
In conclusion, the report emphasised that the CEPA holds considerable strategic importance for India, serving as a gateway to strengthen its presence in Middle Eastern economies. It could act as a catalyst, enhancing India's geopolitical standing and fostering deeper ties with other Middle Eastern countries.
Source: Money Control
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