The relationship between India and Oman is witnessing significant progress, particularly in the realm of trade. Recent developments indicate that both countries have successfully navigated major hurdles in their free trade agreement (FTA) negotiations. The talks have been expedited following the resolution of key issues related to market access for Omani petrochemical products and employment quotas for Omani nationals in Indian investments.
Earlier delays in finalizing the trade deal were primarily due to last-minute disagreements. These disagreements revolved around the trade of petrochemical goods and the "Omanisation" policy, which mandates a specific employment quota for Omani citizens in the private sector.
The Omanisation policy is a crucial aspect of the employment landscape in Oman. It requires companies to employ a designated percentage of Omani nationals—typically ranging from 15% to 30%, depending on the sector. India has sought assurances that these employment quotas will remain stable once the FTA is finalized, ensuring a balanced approach to workforce integration.
This FTA is part of India's broader strategy as it simultaneously engages in trade discussions with the US and the EU. The India-Oman FTA is anticipated to be announced around the same timeframe as these other agreements, likely between June and July 2023.
The agreement with Oman builds on a similar trade pact established with the UAE in 2022. This FTA may provide a framework for enhancing trade relations with other GCC nations, including Saudi Arabia, Qatar, Bahrain, and Kuwait.
Market access for Omani petrochemical products is critical for Oman, which seeks reliable entry into the Indian market. In return, India has expressed interest in securing employment-related guarantees for its workforce in Oman, highlighting a mutual benefit in trade negotiations.
India's stance on market access for petroleum products from GCC countries emphasizes that its petroleum firms are already competitive on a global scale. Consequently, India does not require additional protections and advocates for mutual benefits in FTAs, cautioning against one-sided arrangements.
Recent figures illustrate a robust bilateral trade growth between India and Oman, with an 18.63% increase in FY24, reaching a total of $11.34 billion. In FY25, India exported goods valued at $4.06 billion and imported over $6.55 billion from Oman, reflecting the dynamic nature of their trade relationship.
The negotiations for the FTA commenced during the Modi 2.0 government but gained significant momentum following Commerce Minister Piyush Goyal’s visit to Muscat on January 27–28, 2025. This visit marked a pivotal moment in the discussions, leading to breakthroughs in various contentious areas.
This FTA with Oman is integral to India’s broader trade strategy. It aims to deepen trade ties with West Asia, diversify supply chains, and expand India's trade footprint beyond traditional partners, positioning India as a key player in the region's economic landscape.
Q1. What recent developments have occurred in the India-Oman trade agreement?
Answer: India and Oman have resolved key issues in their free trade agreement negotiations, focusing on market access for Omani petrochemical products and local employment quotas.
Q2. Why was the India-Oman trade deal delayed?
Answer: The trade deal faced delays due to disagreements over petrochemical goods and the Omanisation policy, which requires a certain percentage of Omani nationals in employment.
Q3. What is the Omanisation policy?
Answer: Omanisation mandates that companies employ a set percentage of Omani nationals, usually between 15% to 30%, depending on the industry sector.
Q4. How does the India-Oman FTA fit into India's trade strategy?
Answer: The FTA supports India's goal to strengthen economic ties with West Asia, diversify supply chains, and enhance its trade network beyond traditional partners.
Q5. What are the latest trade figures between India and Oman?
Answer: In FY24, bilateral trade grew by 18.63%, reaching $11.34 billion, with India exporting $4.06 billion and importing over $6.55 billion from Oman.
Question 1: What issue was a key hurdle in the India-Oman trade agreement?
A) Disagreements over petrochemical products
B) Tariffs on agricultural goods
C) Market access for textiles
D) Import quotas on machinery
Correct Answer: A
Question 2: What is the Omanisation policy primarily concerned with?
A) Import tariffs on goods
B) Employment quotas for Omani nationals
C) Export incentives for businesses
D) Trade balance with India
Correct Answer: B
Question 3: When did negotiations for the India-Oman trade agreement begin?
A) 2020
B) 2022
C) 2023
D) 2025
Correct Answer: A
Question 4: Which country did India sign a similar trade agreement with in 2022?
A) Saudi Arabia
B) UAE
C) Qatar
D) Bahrain
Correct Answer: B
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