Syllabus: GS2/IR
Context
- The Union Cabinet has approved the proposed Free Trade Agreement between India and Oman.
About
- The Comprehensive Economic Partnership Agreement approval comes ahead of the Prime Minister’s three-nation tour to Jordan, Ethiopia and Oman.
- It was approved by the lower house of Parliament of Oman as well.
- The PM visit to Oman will be his second visit to the country and coincides with the 70th anniversary of diplomatic relations between the two nations.
- FTA: Negotiations for the agreement began officially in 2023.
- In FTAs two trading partners either significantly reduce or eliminate customs duties on a maximum number of goods traded between them.
- They also ease norms to promote trade in services and attract investments.
- India already has a similar agreement with another Gulf Cooperation Council (GCC) member UAE which came into effect in 2022.
Major Highlights of the FTA
- With the Comprehensive Economic Partnership Agreement (CEPA), India will get access to 98% of its products in Oman and significant access in services.
- Oman’s import duty ranges from 0 to 100% along with the existence of specific duties.
- Other than trade investment flows between the two sides are also expected to benefit from the agreement.
India-Oman Ties
- Diplomatic relations were formalised in 1955 and elevated to a Strategic Partnership in 2008.
- Trade Relations: Oman is India’s 30th largest trading partner in FY 2023-2024 with total trade of US$ 8.947 billion.
- India is among Oman’s top trading partners and Oman is the third largest export destination among the Gulf Cooperation Council (GCC) countries.
- India is the 4th largest market for Oman’s crude oil exports for the year 2023 after South Korea.
- Investment flows have been similarly robust, with more than 6,000 India–Oman joint ventures operating in Oman.
- These ventures account for an estimated 7.5 billion US dollars in capital over time.
- Oman’s cumulative FDI equity inflows into India between 2000 – 2025 amounted to 605.57 million US dollars.
- Defence Cooperation: India and Oman conduct regular biennial bilateral exercises between all three services.
- Army exercise: Al Najah
- Air Force exercise: Eastern Bridge
- Naval Exercise: Naseem Al Bahr
- Maritime Cooperation: Oman is at the gateway of Strait of Hormuz through which India imports one-fifth of its oil imports.
- India signed a pact with the country in 2018 to access the Duqm port of Oman.
- The Port of Duqm is situated on the southeastern seaboard of Oman, overlooking the Arabian Sea and the Indian Ocean. It is strategically located, in close proximity to the Chabahar port in Iran.
| About GCC – It is a political and economic alliance of six Middle Eastern countries—Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman. – It was established in 1981. – It aims to achieve unity among its members based on their common objectives and their similar political and cultural identities, which are rooted in Arab and Islamic cultures. – The presidency of the council rotates annually. |
Way Ahead
- Realpolitik and strategic interests have been instrumental in bringing India closer to the Gulf countries, with both sides willing to collaborate.
- In the long run, defense industrial cooperation and technology transfers will likely come to form a pivotal component of their strategic cooperation.
- The convergences of interests – political, economic, technological and military-security – therefore, could pave the way for the furtherance of India’s diplomacy with the Gulf states.
Source: DD
Previous article
Cabinet Approves SHANTI Bill
Next article
New Fight for Spectrum in Space
