India, Oman to sign free trade agreement soon

These steps are seen as crucially important to achieve the objective of boosting exports to $2 trillion by 2030 from $776 billion recorded in the fiscal year ended March 2024.
Last Updated : 16 June 2024, 18:22 IST

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Lhasa: As part of its 100-day action plan, Prime Minister Narendra Modi’s government is targeting the signing of a free trade agreement (FTA) with Oman soon, and has put in place a standard operating procedure to speed up negotiations with other trading partners, DH has learnt.

These steps are seen as crucially important to achieve the objective of boosting exports to $2 trillion by 2030 from $776 billion recorded in the fiscal year ended March 2024.

According to a senior official, negotiations on the India-Oman Comprehensive Economic Partnership Agreement (CEPA) are almost complete and the deal is likely to be signed in a couple of months. The deal seeks to lower or eliminate duties on key products including textiles, electronics, pharmaceuticals, machinery, iron, steel and petroleum products. Issues related to labour mobility are also part of the negotiation.

In order to bring consistency and speed up the free trade talks, the Ministry of Commerce and Industry plans to come up with a standard operating procedure (SOP). Top officials and past negotiators for trade deals and experts, recently, met to discuss the SOPs.

The free trade deal with the European Union (EU) is also on the top of the agenda. The eighth round of negotiations on the India-EU FTA is scheduled to be held from June 24 to June 28 in Brussels. After a 9-year lull, India and the EU re-launched FTA negotiations in June 2022. The 27-member EU is one of the country’s key trading partners and is the second largest destination for India’s exports.

While India enjoys a trade surplus with the EU, issues like Carbon Border Adjustment Mechanism (CBAM) have created a lot of apprehensions among the Indian exporters. Under the CBAM, the EU plans to impose levies on imports of specific carbon intensive products.

The new tax regime, which is scheduled to come into effect from January 1, 2026, will be initially applicable to steel, aluminium, cement, fertiliser, hydrogen and electricity, and proposed to be expanded to all imports into the EU in due course.

According to sources, the Indian authorities took up the CBAM issue during a stock taking meeting held on May 7 in a virtual mode. Issues under various policy areas such as market access in goods & services, investment, government procurement, rules of origin and intellectual property rights (IPR) were discussed as well.

Meanwhile, the seventh round of negotiations on the India-Peru trade agreement was conducted in April and the next round is likely to start this month. With $3.68 billion of bilateral trade in 2023, Peru is India’s third-largest trading partner in the Latin America-Caribbean region.

However, the negotiations on the proposed India-UK free trade agreement have been paused, first due to the Lok Sabha elections and now due to the British general elections

As per most of the opinion polls, Prime Minister Rishi Sunak's Conservative Party is expected to lose in July 4’s election. The Labour Party, which is widely expected to win the upcoming election in the UK, has promised in its manifesto that it will focus on deepening cooperation with India in areas like security, education, technology and climate change.

While there is a continuity from the Indian side as the same government is back in power, it will be interesting to see how a possible new government in the UK takes up the issue. “Outstanding issues to seal the deal have to be resolved once the general elections in the UK are over,” noted an official. The issues that remain unresolved include certain services, rules of origin and tariffs on electric vehicles and alcoholic beverages.

India is also likely to start new FTA negotiations with New Zealand and Saudi Arabia. Among the Gulf Cooperation Council (GCC) nations, India has already signed a CEPA with the United Arab Emirates. Saudi Arabia will be the third GCC country to start trade and economic partnership negotiations with India.

Published 16 June 2024, 18:22 IST

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