India signed an economic partnership agreement with Oman on Thursday (18) to boost bilateral trade and investment, as it seeks to expand ties with the Middle East and diversify trade to cope with high tariffs imposed by the United States.
Oman offered zero-fare access on more than 98% of its tariff lines, covering almost all Indian exportsincluding gems and jewelry, textiles, pharmaceuticals and automobiles, India’s commerce ministry said in a statement.
On the other hand, the India will reduce tariffs on around 78% of its tariff lines, covering around 95% of imports from Oman by value..
India and Oman enjoy annual trade of over $10 billion. The relationship is important to New Delhi because the Gulf country is a gateway to the Strait of Hormuz between Oman and Iran, an important transit point for global oil shipments.
“This (agreement) will give a new pace to our trade, add new confidence to our investments and open doors to new opportunities in many sectors,” Indian Prime Minister Narendra Modi said in a speech in Oman on Thursday.
The deal, the second signed by India this year after that with the United Kingdom, will help Indian products penetrate new markets as exporters step up diversification efforts to circumvent US President Donald Trump’s punitive tariffs.
Oman’s first bilateral agreement since 2006
This is Oman’s first bilateral agreement since the one signed with the United States in 2006. After negotiations failed, Trump doubled customs duties on Indian products at the end of August, raising them to 50%, the highest level in the world. The increase included a 25% surcharge in retaliation for Indian purchases of Russian oil.
Despite negotiations, New Delhi failed to reach an agreement with the United States or the European Union this year, as it had initially planned.
“The deal is as much about geopolitics and regional presence as it is about tariffs,” said Ajay Srivastava, founder of the Global Trade Research Initiative.
The deal is expected to boost exports of gems and jewelry, which could increase from $35 million to about $150 million over the next three years, said Kirit Bhansali, chairman of the Gems and Jewelry Export Promotion Council.
Sensitive products, including dairy products, tea, coffee, rubber and tobacco, were excluded from the agreement.
The deal also provides an opportunity in Oman’s estimated $12.5 billion services import market, in which India currently has only a 5.3% share, the statement said.
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