India's FTA with Oman hits deadlock over revision in market access offer

The proposed free trade agreement (FTA) between India and Oman has hit a deadlock, as the West Asian nation has asked New Delhi to revise its market access offer on certain products.

 

Government officials said that the negotiations were completed earlier in March and revising India’s offer would mean restarting inter-ministerial consultations to firm up India’s revised stance. 

“India is not ready to restart discussions after already seeking inter-ministerial approval in the past,” a person aware of the told Business Standard. 

   

Besides, there is a growing feeling amid policymakers that India needs to be more cautious before signing any FTA. This is because of its past experiences, with the latest one being with the United Arab Emirates (UAE), signed in 2022. There has been a surge in imports of precious metals and some food items post India-UAE trade agreement implementation. 

India now wants to be more cautious in the case of Oman, also because both Oman and UAE are part of the six-member Gulf Cooperation Council (GCC), the person cited above said. 

“There’s another view that since Oman is a much smaller country as compared to India, growth in trade and gains for New Delhi could be limited. As a result, India needs to be clear regarding its gain before signing a trade agreement,” another person said.

As far as market access is concerned, one of the main areas of contention has been the pressure on New Delhi to give greater market access to polyethylene and polypropylene — intermediates used to manufacture plastics, medical devices, electronics and automobile components. 

These petrochemical products attract 7.5 per cent import duty in India. 

It is learnt that India is ready to impose a cap or tariff rate quota (TRQ) on the import of polyethylene and polypropylene. The formal commencement of the India-Oman FTA negotiations started in November last year. Negotiations on the text of most of the chapters were concluded by the duo by January. 

The idea was to sign the agreement post Lok Sabha elections in India — as soon as the new government in India assumes charge in New Delhi in June.  However, fresh demand from Oman for a revised offer has put the deal on a deadlock, the first person cited above said.

 

Government officials had earlier said the India-UAE agreement was expected to be replicated in the case of the trade pact with Oman, making it easier for the two countries to negotiate. 

Oman is India’s 30th largest trading partner, but the third largest export destination among the GCC countries, after UAE and Saudi Arabia. 

Bilateral trade between the two countries stood at $8.9 billion in the financial year 2023-24.