A demand for Customs duty on petrochemical products such as polypropylene and polyethylene, which are used primarily in the plastics industry, may act as a sticking point in the early conclusion of talks for the proposed free-trade agreement (FTA) between India and Oman, according to an official.
Negotiations for the pact, officially dubbed the Comprehensive Economic Partnership Agreement (CEPA), are in the last phase.
Some domestic players from both public and private sectors are opposing duty concessions on these products under the agreement. They claim that Oman provides huge subsidies to its industry on raw materials for the production of these petrochemical products. According to them, 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.
Officials of the two countries concluded the second round of talks for the agreement in December last year.
At present the customs duties on these products are around 7.5 per cent. Domestic plastic makers, however, are of the view that duty cuts will give a boost to the labour-intensive sector as raw material cost accounts for about 60 per cent of the final goods.
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 increased from $5 billion in 2018-19 to $12.39 billion in 2022-23. India's exports have increased from $2.25 billion in 2018-19 to $4.48 billion in 2022-23.
India's imports from Oman stood at about $8 billion in 2022-23. Key products included petroleum products ($4.6 billion), urea ($1.2 billion); propylene and ethylene polymers ($383 million).
According to thinktank GTRI (Global Trade Research Institute), Indian goods such as petrol, iron and steel, electronics, and machinery, worth $3.7 billion, will get a significant boost in Oman, once both sides reach a comprehensive free trade agreement. Currently, over 80% of India's goods enter Oman at an average of 5 per cent import duties, the GTRI report has said, adding Oman's import duty ranges from 0 to 100 per cent along with the existence of specific duties.
