FTA with Oman stuck on duty concessions demanded on petro products

Customs duty concession demand on certain petrochemical products used primarily in the plastics industry, may come in the way of early conclusion of talks for the proposed free-trade agreement (FTA) between India and Oman, according to an official. Customs duty concessions if conceded to Oman would affect the prospects of domestic industry like Reliance Industries.

At present the customs duties on these products imported from Oman are at around 7.5 per cent. Domestic plastic makers, however, are of the view that duty cuts will give a boost to the labor-intensive sector as raw material cost accounts for about 60 per cent of the final goods

Certain domestic players from both public and private sectors are opposing duty concessions on these products under the agreement. They are claiming that Oman provides huge subsidies to its industry on raw materials for the production of these petrochemical products. If India would give duty concessions on these already subsidised products, it would be a double advantage for Omani firms. The government official said that they are holding talks with domestic players on the issue

Negotiations for the pact, officially dubbed the Comprehensive Economic Partnership Agreement (CEPA), are in the last phase. Officials of the two countries concluded the second round of talks for the agreement in December last year. The negotiations on the text of most of the chapters have been concluded by both sides.

Oman is the third largest export destination among the Gulf Cooperation Council (GCC) countries. The bilateral trade was 12.39 billion US dollars in 2022-23 as against 5 billion US dollars in 2018-19. India's exports have increased from  2.25 billion US dollars in 2018-19 to  4.48 billion US dollars in 2022-23.

Currently, over 80 per cent of India's goods enter Oman at an average of 5 per cent import duties, while Oman's import duty ranges from 0 to 100 per cent along with the existence of specific duties.