
India and Oman Weave Closer Trade Ties with FTA Talks
21 January 2025: India and Oman are engaged in crucial discussions aimed at forging a free trade agreement (FTA), a move poised to significantly impact bilateral textile trade. The fifth round of negotiations for Comprehensive Economic Partnership Agreement (CEPA) commenced on January 13th, marking a significant step towards bolstering economic cooperation between the two nations.
While the primary focus of current trade involves commodities like gasoline, iron, steel, and machinery, the potential for growth in the textile sector is substantial. Currently, Indian goods face an average of 5% import duty in Oman, with some duties reaching as high as 100% on select items. The proposed CEPA aims to dismantle these tariff barriers, creating a more seamless flow of textiles and related products.
Oman represents a key export market within the Gulf Cooperation Council (GCC) for India. A successful FTA could open doors for Indian textile manufacturers to access the Omani market more competitively. This is particularly relevant considering India’s existing FTA with the UAE, another GCC member, which came into effect in May 2022 and has already demonstrated the positive impact of such agreements on trade.
Although current import figures from Oman to India are dominated by petroleum products and urea, accounting for over 70% of imports, there is a growing interest in diversifying trade. The CEPA could pave the way for increased exchange of textile raw materials, fabrics, and finished garments. This could include finding new markets for Indian cotton yarns and fabrics in Oman, while specialised Omani textile products could gain easier access to the Indian market.
The overall bilateral trade between India and Oman has seen a recent decline, falling to $8.94 billion in 2023-24 from $12.39 billion in 2022-23. However, the anticipated FTA is expected to reverse this trend by stimulating trade across various sectors, including textiles. By reducing or eliminating customs duties and streamlining trade norms, the CEPA aims to create a more favourable environment for textile businesses on both sides, potentially leading to increased investment and collaboration within the sector. These negotiations represent a significant opportunity for the textile industries of both nations to weave stronger, more profitable trade relationships.