New Delhi: Talks surrounding the proposed free-trade agreement (FTA) between India and Oman, known as the Comprehensive Economic Partnership Agreement (CEPA), are facing a potential roadblock. Duty concessions on petrochemical products, including polypropylene and polyethylene, crucial components in the plastics industry, have become a contentious issue.
Negotiations for the pact are in the final phase, but certain domestic players from both public and private sectors are opposing duty concessions on these petrochemical products. The argument stems from concerns that Oman provides significant subsidies to its industry for the production of these petrochemicals. Granting duty concessions, according to opponents, would provide Omani firms with a double advantage.
Government officials are actively engaged in discussions with domestic players to address these concerns and facilitate a consensus.
At present, customs duties on these petrochemical products stand at approximately 7.5%. While some domestic plastic manufacturers argue that duty cuts would benefit the labor-intensive sector by reducing raw material costs, others express apprehension about potential disadvantages for Indian industries.
Bilateral trade between India and Oman has been growing, with Oman being the third-largest export destination among the Gulf Cooperation Council (GCC) countries. The trade volume was USD 12.39 billion in 2022-23, compared to USD 5 billion in 2018-19. Both countries are working towards a comprehensive free trade agreement, with negotiations on most chapters concluded.
India’s exports to Oman include goods worth USD 3.7 billion, such as gasoline, iron and steel, electronics, and machinery, which are expected to receive a significant boost if an agreement is reached. Oman’s import duties currently range from 0 to 100%, and specific duties exist.
The outcome of the FTA talks will have implications for various industries, and stakeholders are closely watching the developments.
