India inks trade agreement with Oman

Indian Prime Minister Narendra Modi signed a new economic partnership agreement with Oman during an official state visit to Oman, Reuters reported on December 18th.

Modi was received by Oman’s Deputy Prime Minister for Defence Affairs, Sayyid Shihab bin Tarik Al Said, after landing at Muscat. The visit marks the last stage of Modi’s tour of Oman, Jordan, and Ethiopia. The agreement will boost bilateral trade and investment between Oman and India. The agreement could greatly benefit the latter, which is seeking to increase its relations in the Middle East and strengthen its trade following an increase in tariffs imposed by the United States.

As part of the deal, Oman has offered a a zero-duty access to over 98% of its tariff lines, which will cover most exports from India. India’s ministry outlined that this will include gems, jewellery, textiles, pharmaceuticals and vehicles. In return, India will slash around 78% of tariffs on trade from Oman covering a total of 95% of imports. The agreement will benefit both nations, particularly due to Oman’s location on the Strait of Hormuz, an important transit route for shipping. India currently holds a 5.3% share in Oman’s import market, which generates around $12.5 million to the Omani economy.

The deal marks Oman’s first bilateral agreement since signing a trade agreement with the US in March 2006. According to Gems and Jewellery Export Promotion Council chairman, Kirit Bhansali, it is hoped that revenue generated by exports from India, particularly from jewellery and gems, could increase from $35 million to over $150 million. More sensitive goods including dairy products, tea, coffee, rubber and tobacco, have all been excluded from the deal.

The trade agreement has been greeted with enthusiasm in India, where the economy has experienced severe fluctuations since the increase of the tariffs this summer. At the end of August, the Indian rupee sank to a record low of 88.3075 compared to the US dollar. The Oman deal marks India’s second Free Trade Agreement this year following another deal with the UK in May. India is also seeking to engage in talks with the European Union, New Zealand, and Chile, to advance further access for Indian exporters.

Reuters, Maghrebi.org