Over 83.5 per cent of Indian goods worth US$ 3.7 billion such as gasoline, iron and steel, electronics, and machinery will get a significant boost in Oman, once both sides reach a comprehensive free trade agreement, stated a report.
According to the report titled – India-OMAN CEPA: Gateway to Middle Eastern Markets and Beyond – prepared by think tank Global trade Reproach Initiative or GTRI, these goods at present face a 5 per cent import duty in Oman.
Bharat and Oman are negotiating a comprehensive economic partnership agreement (CEPA), under which the two countries could significantly reduce or eliminate customs duties on the maximum number of goods agreed between them.
With the new trade agreement, these products, including major export items like motor gasoline (exports worth US$ 1.7 billion), iron and steel products (exports worth US$ 235 million), electronics (US$ 135 million), machinery (US$ 125 million), aluminium oxide (US$ 126 million), textiles (US$ 110 million), alumina calcined (US$ 105 million), plastics (US$ 64 million), boneless meat (US$ 50 million), essential oils (US$ 47 million), and motor cars (US$ 28 million), will benefit from duty elimination, it said.
However, it added that about 16.5 per cent of Indian exports to Oman, worth US$ 800 million and goods that already have duty-free access, will not see additional benefits from the agreement.
These items include wheat (US$ 45 million), basmati rice (US$ 125 million), fruits, vegetables (US$ 76 million), medicines (US$ 76 million), fish (US$ 13.7 million), tea, coffee (US$ 17.7 million).
“The duty elimination will aid most Indian exports, but significant growth in the Omani market, a small, middle-income economy with a US$ 25,000 per capita income, will also depend on product quality improvements,” said GTRI Co-Founder Ajay Srivastava.
He said Bharat can hope to radically increase its exports post the free trade agreement, as currently over 80 per cent of its goods enter Oman at average 5 per cent import duties, and there are not many trade barriers.
Oman’s import duty ranges from 0 to 100 per cent along with the existence of specific duties. 100 per cent duty is applicable on specific meats, wines and tobacco products.
Bharat’s merchandise imports from Oman were US$ 7.9 billion in 2022-23. Key imports are petroleum products (US$ 4.6 billion) and urea (US$ 1.2 billion). These account for 73 per cent of imports.
Other key products are propylene and ethylene polymers (US$ 383 million), pet coke (US$ $265 million), gypsum (US$ 115 million), chemicals (US$ 417 million), iron and steel (US$ 62 million), and unwrought aluminium (US$ 95 million).
“These products will gain from FTA-led tariff elimination by Bharat. Most are raw materials and input to industries and India has opened most such imports from other FTA partner countries,” the report said.
To provide greater market access for its pharma products, Bharat may request Oman for track approval for Indian pharma products that are already registered with the US Food and Drug Administration (USFDA), UK drug regulator MHRA and European Medicines Agency, it said.
Bharat’s FTA with UAE has a similar proposal. Bharat has implemented a trade agreement with the UAE in May. Both Oman and UAE are members of the Gulf Cooperation Council (GCC).
Bharat’s GDP of about US$ 3.5 trillion is significantly larger than Oman’s GDP of US$ 115 billion. This indicates that India’s economy is far more extensive and diverse.
With a population of 1.4 billion compared to Oman’s 5 million, Bharat represents a vast consumer market for Oman.
Similarly, Oman’s products, particularly in sectors like oil and gas, petrochemicals, and certain types of manufactured goods, will find a more receptive market in Bharat. Reduced import duties mean these products can be offered at more competitive prices, potentially increasing Omani exports.
“Beyond the immediate economic benefits, the CEPA holds considerable strategic importance for Bharat. It serves as a gateway for Bharat to strengthen its footprint in Middle Eastern economies. This partnership with Oman can act as a catalyst, enhancing India’s geopolitical presence and fostering deeper ties with other Middle Eastern countries,” he added.
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