The demand for Customs duty on petrochemical products, specifically polypropylene and polyethylene, essential components in the plastics industry, might pose a challenge to the swift conclusion of discussions regarding the proposed free-trade agreement (FTA) between India and Oman, as indicated by a government official.
The negotiations for the agreement, officially named the Comprehensive Economic Partnership Agreement (CEPA), are currently in the final stages. Some stakeholders from both the public and private sectors within India are expressing reservations about granting duty concessions on these products under the agreement. They argue that Oman provides substantial subsidies to its industry for raw materials used in producing these petrochemical products. Granting duty concessions on these already subsidized products, according to them, would confer a double advantage to Omani firms. The official mentioned ongoing talks with domestic stakeholders to address these concerns.
The two countries' officials concluded the second round of talks for the agreement in December of the previous year. Currently, customs duties on these products stand at around 7.5 percent. Domestic plastic manufacturers, however, assert that reducing duties would invigorate the labor-intensive sector, given that raw material costs constitute about 60 percent of the final goods.
Negotiations on the text of most chapters have been finalized by both parties. Oman ranks as the third-largest export destination among the Gulf Cooperation Council (GCC) countries. Bilateral trade surged from $5 billion in 2018-19 to $12.39 billion in 2022-23. India's exports witnessed an increase from $2.25 billion in 2018-19 to $4.48 billion in 2022-23.
India's imports from Oman reached approximately $8 billion in 2022-23, encompassing key products such as petroleum products ($4.6 billion), urea ($1.2 billion), and propylene and ethylene polymers ($383 million). According to the Global Trade Research Institute (GTRI), Indian goods, including petrol, iron and steel, electronics, and machinery, worth $3.7 billion, are anticipated to receive a substantial boost in Oman upon the comprehensive conclusion of the free trade agreement. Currently, over 80% of India's goods enter Oman facing an average of 5 percent import duties. The GTRI report underscores the variety in Oman's import duties, ranging from 0 to 100 percent, along with specific duties.
