India nearing free trade deal with Oman as part of wider Gulf outreach

India set to seal FTA with Oman, pushes to strengthen ties with Gulf Nations (Representative Image)

India is advancing its economic engagement with Gulf nations by finalising trade agreements, as these countries have maintained a neutral position and urged de-escalation during the recent India-Pakistan conflict.

According to a report by the Economic Times, India is close to signing a free trade agreement (FTA) with Oman, its oldest strategic partner in the Gulf.

India-Oman close ties

Sources familiar with the matter revealed to Economic Times that the India-Oman FTA is near completion, and the official announcement could be made later this month.

“Only a few issues are left to be resolved with Oman and an announcement could be made this month,” the source involved in the negotiations mentioned.

The formal launch of talks for the India-Oman Comprehensive Economic Partnership Agreement (CEPA) took place in November 2023.

Between April and February of FY25, India's goods exports to Oman totaled $4.42 billion, while imports stood at $4.52 billion. Petroleum products and urea accounted for over 70% of the imports. Other major imports include polymers of propylene and ethylene, pet coke, gypsum, chemicals, and iron and steel.

On the export side, India’s key products include light oils and preparations, ships and floating structures, aluminium oxide (excluding artificial corundum), rice, mechanical appliances and parts, aircraft, sunglasses, meat and edible meat offal, birds’ eggs, as well as fruits, vegetables, spices, tea, and coffee.

The two nations have also updated their Double Taxation Avoidance Agreement (DTAA), bringing it in line with global standards for cross-border taxation. Investment ties remain strong, with numerous joint ventures established between the two countries.

As of December 2023, joint venture investments in Oman were valued at approximately $776 million. Foreign direct investment (FDI) inflows from Oman to India between April 2000 and June 2024 totaled $597.14 million, according to the Indian Embassy in Oman.

Strengthening ties with other Gulf nations

The Indian government is also “seriously considering” similar trade agreements with other Gulf nations, including Qatar, the source added. Qatar, whose Emir visited New Delhi in February and expressed interest in major investments in India, remained neutral during the India-Pakistan standoff.

India has already signed an FTA with the United Arab Emirates and is in ongoing negotiations for a broader trade agreement with the Gulf Cooperation Council (GCC), which includes Saudi Arabia, the UAE, Qatar, Kuwait, Oman, and Bahrain.

These negotiations aim to strengthen cooperation with these countries in trade, energy, investment, and security.