A landmark trade agreement is on the horizon as India and Oman move closer to formalizing a deal in the coming months, according to two Indian government officials. Spearheading an initiative to deepen ties with Middle Eastern countries amid growing regional strife, New Delhi views this deal as a strategic enhancement of relations with a key partner situated along crucial maritime lanes.
One official explained that the agreement is a means to strengthen India’s hand in a tumultuous environment where escalating tensions have jeopardized shipping routes that are vital for global trade. These security concerns are underscored by the hostilities emanating from the Israel-Hamas conflict that has extended into friction with Iran, and the assertive military actions by Yemen’s Houthi militants in the Red Sea, proclaiming solidarity with their Palestinian counterparts.
The potency of the India-Oman relationship is not merely reflected in the nearly $13 billion in annual trade but is also significant due to Oman’s position as a nexus point on the Strait of Hormuz. This narrow waterway, lying between Oman and Iran, is one of the world’s most critical arteries for the transport of petroleum.
In light of India’s ongoing national elections, finalization of the trade pact awaits the approval of the victorious government, with results expected on June 4. Prime Minister Narendra Modi, who has embarked on ambitious trade and foreign policy initiatives during his tenure, is widely anticipated to secure a third term.
As these pivotal discussions advance, the officials involved have requested anonymity due to the private nature of the conversations. Additional overtures for comments directed at India’s trade and foreign ministries, as well as Oman’s embassy in India and its foreign ministry, have not elicited any official statements.
Efforts to establish a comprehensive agreement with the Gulf Cooperation Council (GCC) have seen limited progress, prompting India to pursue bilateral trade agreements with individual GCC members like Oman and the United Arab Emirates. This strategic pivot not only diversifies India’s trade portfolio but also comes at a time when the GCC is engaging in trade negotiations with other regional players such as Pakistan and China.
The forthcoming pact with Oman is particularly advantageous for India. According to the officials, Oman has consented to remove duties on a variety of Indian exports including agricultural products, gems and jewellery, leathers, automobiles, medical devices, engineering products, and textiles, culminating in benefits worth an annual $3 billion.
In a reciprocal move, India is set to reduce duties on select Omani exports such as petrochemicals, aluminium, and copper, with added measures to cap the imports of these goods to maintain a balance in trade dynamics.
This prospective trade deal is a crescendo in the symphony of India’s diplomatic outreach to secure and foster its international trade interests. The increasingly volatile geopolitical landscape serves as a backdrop for New Delhi’s initiatives to create more robust economic ties, ensuring access to essential markets and creating investment opportunities for the future.
Seen through the lens of economic strategy, the India-Oman trade pact is more than an agreement on tariffs and trade; it represents a piece in the larger puzzle of India’s pursuit to build a geoeconomically favorable position in both the Middle East and broader international systems. As the global economy becomes increasingly interconnected and as regional tensions pose challenges to stability and market access, such bilateral deals are key components of India’s overarching approach to diplomacy in the 21st century.
