India inks Oman FTA, gains duty-free boost

INdia and muscat and oman on th signed a release merchandise accord that allows duty-free access of almost all Indian goods in the West Asian country, a comprehensive services package spanning 127 sectors, and a liberalised mobility framework for Indian professionals including accountants, architects, doctors and practitioners of traditional medicine.The India-Oman Comprehensive Economic Partnership Agreement (CEPA) was signed in Muscat by Union commerce Piyush Goyal and his Omani counterpart Qais bin Mohammed Al Yousef in the presence of Prime Minister Narendra Modi and Sultan Haitham bin Tarik.The Prime Minister called it a “historic” decision and said its “positive impact will be felt for decades” to come. The CEPA will energise our ties in the 21st century, he added. “It will give new momentum to trade, investment and open new opportunities across different sectors. The youth of both nations will greatly benefit.”The CEPA gives zero-duty access to products of all major labour-intensive sectors of India, including gems and jewellery, textiles, leather, footwear, sports goods, plastics, furniture, agriculture, engineering, pharmaceuticals, medical devices, and automobiles. The agreement is expected to be operational by the first quarter (April-June) of 2026-27 after completing all regulatory processes, two people aware of the development said, requesting anonymity. India and Oman started negotiations for the CEPA in November 2023.The FTA is only Oman’s second with an individual country (after one with the US), although the Gulf Cooperation Council bloc of which Oman is part has agreements with some countries.It is the latest among a series of trade deals signed by India, the most recent one being a Comprehensive Economic Trade Agreement with the UK, which reduces tariffs on almost 90% of the goods traded by the two countries. India also signed a trade deal with the European Free Trade Association comprising Switzerland, Norway, Iceland, and Liechtenstein in 2024. India also signed an economic cooperation and trade agreement with Australia in 2022 and another CEPA with the UAE, also in 2022. India is currently negotiating trade deals with the EU -- expected to be announced early next year according to some people -- and the US.Under the terms of the CEPA with Oman, India gets zero-duty access on 98.08% of Oman’s tariff lines, covering 99.38% of India’s exports by value. In return, New Delhi is offering tariff liberalisation on 77.79% of its tariff lines, covering 94.81% of India’s imports from Oman by value, the commerce ministry said in a statement.India has placed about 2,700 tariff lines in the exclusion list to protect domestic sectors such as transport equipment, major chemicals, chocolates, cereals, dairy products, cereals, oilseeds, fruits and vegetables, spices, coffee and tea, and animal origin products. Sensitive industries including rubber, leather, textiles, footwear, petroleum oils, and mineral-based products have also been shielded to safeguard manufacturing competitiveness and farmer interests, the people mentioned above said.India has also protected high-value segments such as jewellery, precious metals, non-ferrous metals, and petroleum products. Similarly, the agreement has also taken care of Oman’s sensitivities by excluding cigarettes, tobacco, alcohol and other beverages from the deal.A tariff-rate quota (TRQ) has been put to check import of sensitive items for India such as marble, dates, petrochemicals and plastics. India has not liberalized imports of the precious metal with Oman, the people said, a marked difference from the deal with UAE which allows TRQ-based gold imports. . TRQ is a trade mechanism that allows import of only a specific quantity of any specified product to be imported at a concessional tariff.Following his discussions with Sultan Haitham, PM Modi thanked the Omani leader for his efforts that ensured the conclusion of the deal. “It is indeed a new and golden chapter of bilateral cooperation,” Modi said, noting that the CEPA will “energise our ties in the 21st century”.Oman is an important strategic partner in the region and a key gateway for Indian goods and services to the wider West Asian region and Africa. Rules of origin may apply for re-export of merchandise after value addition in Oman, which is practical as ample land is available there for setting up facilities.After initial resistance, which was one of the reasons to defer the signing of the deal in March 2024, Oman agreed to raise the cap under its Omanisation programme that is technically known as Intra-corporate transferees (ICTs) in trade deals. Oman has raised the ICT cap from 20% to 50%, enabling Indian companies to deploy a larger share of managerial, executive, and specialist staff, exceeding its commitments under other trade agreements. The basic principle of the Omanisation programme is to replace expatriates with trained local personnel. It mandates a sector-specific percentage or quota, which is often revised.In order to boost India’s services exports, the agreement also provides for more liberal entry and stay conditions for skilled professionals in key sectors such as accountancy, taxation, architecture, medical and allied services. The FTA provides for 100% foreign direct investment (FDI) by Indian firms in major services sectors in Oman through commercial presence. In addition, both sides have agreed to hold future discussions on social security coordination once Oman’s contributory social security system is implemented.One of the unique features of the CEPA with Oman is its commitment to traditional medicine. The agreement includes a dedicated annexure recognising trade in health-related services and traditional medicine services, creating a significant opportunity for India’s AYUSH and wellness sectors.The two sides also finalised memorandums of understanding (MoUs) for cooperation in agriculture, higher education, including exchanges of faculty and researchers, and maritime heritage, and an executive programme for collaborating in millet cultivation and agri-food innovation. They also adopted a Joint Vision Document on Maritime Cooperation to strengthen collaboration in regional maritime security and the blue economy.During their talks, Modi and Sultan Haitham discussed cooperation in food security, manufacturing, digital technologies, critical minerals, logistics and space, and the possibility of linking India’s Unified Payments Interface (UPI) with the Omani digital payment system and trade in local currencies. They also looked at the possibility of giving a new thrust to energy cooperation through long-term arrangements, renewable energy ventures and green hydrogen projects, the external affairs ministry said in a readout.“The two leaders reaffirmed their commitment to further enhancing defence and security collaboration, including in the maritime domain,” the readout said.Modi and Sultan Haitham also focused on regional and global issues, including the situation in Gaza. Arun Kumar Chatterjee, secretary (overseas Indian affairs) in the external affairs, told a media briefing: “While expressing concern over the humanitarian situation in Gaza and calling for the safe and timely delivery of humanitarian aid to civilians, the two leaders welcomed the signing of the first phase of the Gaza Peace Plan and reiterated their support for it.”They also condemned all forms terrorism and stated that no justification can be accepted for terrorist acts, Chatterjee said.