Context:
- India and Oman signed a Comprehensive Economic Partnership Agreement (CEPA) in Muscat.
- The agreement aims to enhance bilateral trade, investment, and economic cooperation by providing duty-free market access to Indian exports.
- It marks a significant milestone in India’s trade diplomacy with the Gulf region.
Key Highlights:
Agreement Insights:
- CEPA grants India duty-free access to 98.3% of Oman’s tariff lines, covering 99% of India’s exports to Oman.
- Oman has liberalised tariffs on 77.7% of its total tariff lines, covering 94.9% of India’s exports.
- India will eliminate tariffs on 83.6% of its tariff lines for imports from Oman, covering 90.1% of India’s imports from Oman.
Trade & Economic Impact:
- India’s exports to Oman stood at $4.02 billion in 2024–25, accounting for 0.93% of India’s total exports.
- Imports from Oman were $6.5 billion, making up 0.91% of India’s total imports.
Strategic Dimensions:
- CEPA is India’s first trade agreement with a Gulf country after the UAE CEPA (2022).
- Oman is the first country since the US (2006) with which India has signed such an agreement.
- The agreement is aligned with India–Oman Vision Partnership and supports cooperation in the Indo-Pacific, energy security, and regional connectivity.
Stakeholders Involved:
- Signed in the presence of Prime Minister Narendra Modi and Sultan Haitham bin Tarik of Oman.
- Negotiated by India’s Ministry of Commerce and Industry and Oman’s Ministry of Commerce, Industry and Investment Promotion.
Relevant Prelims Points:
- Issue: Need to expand India’s trade footprint in the Gulf region and diversify export markets.
- Government Initiative: CEPA as part of India’s FTA/CEPAs strategy (UAE CEPA, Australia ECTA, etc.).
- Benefits:
- Boost to labour-intensive sectors such as textiles, gems & jewellery, MSMEs, artisans, and women-led enterprises.
- Improved market access, supply chain integration, and trade facilitation.
- Challenges:
- Ensuring competitiveness of Indian MSMEs.
- Managing trade imbalances and compliance with rules of origin.
- Impact:
- Strengthens India’s role as a reliable economic partner in the Gulf and Indo-Pacific.
Relevant Mains Points:
- Key Concepts: Free Trade Agreements (FTAs), CEPA, tariff liberalisation, trade diversification.
- Static Linkages:
- India’s Look West / Link West Policy.
- Role of Gulf Cooperation Council (GCC) in India’s energy and trade security.
- Significance:
- Enhances economic trust, investment flows, and people-to-people ties.
- Serves as a gateway for Indian trade to GCC, Africa, Central Asia, and Eastern Europe.
- Way Forward:
- Strengthen export competitiveness and standards compliance.
- Promote services trade, digital trade, and green energy cooperation.
- Use CEPA as a template for future GCC-wide trade engagement.
UPSC Relevance (GS-wise):
- GS I: India’s relations with Gulf countries
- GS II: International relations, bilateral agreements
- GS III: Economy – foreign trade, FTAs, MSMEs, employment
- GS IV: Ethical dimensions of inclusive growth and cooperation