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India–Oman CEPA Boosts Trade And Labour Mobility

Why in the News?

India and Oman signed a Comprehensive Economic Partnership Agreement (CEPA) granting near-complete duty-free market access to Indian exports and enhanced labour mobility, marking India’s second trade pact with a GCC country after the UAE. This agreement also addresses concerns related to environmental impact assessment and pollution-free environment initiatives.

Key Features of the India–Oman CEPA:

  • Under the CEPA, Oman will grant duty-free access to 98.08% of its tariff lines, covering 99.38% of India’s exports, significantly improving market access.
  • India has reciprocated by offering tariff liberalisation on 77.79% of its tariff lines, covering 94.81% of imports from Oman.
  • The agreement was signed in Muscat by Commerce Minister Piyush Goyal and Oman’s Commerce Minister Qais bin Mohammed Al Yousef, in the presence of PM Narendra Modi and Sultan Haitham bin Tarik.
  • Labour-intensive sectors such as gems and jewellery, textiles, leather, footwear, engineering goods, pharmaceuticals, medical devices, automobiles, plastics, furniture, and agricultural products will receive full tariff elimination.
  • India has excluded sensitive sectors like dairy, tea, coffee, rubber, tobacco, gold and silver bullion, and certain metal scraps to protect domestic producers.

Strategic and Economic Significance

  • India exported goods worth $4.06 billion to Oman in 2024–25, while imports stood at $6.5 billion, highlighting scope for trade correction and expansion.
  • The CEPA is Oman’s first bilateral trade agreement since 2006, underscoring growing trust in India as a strategic economic partner.
  • For India, the deal acts as a gateway to the GCC, as well as Eastern Europe, Central Asia, and Africa, enhancing regional connectivity.
  • PM Modi described the CEPA as a “blueprint for the future”, aimed at boosting investment, innovation, employment, and youth opportunities.
  • The agreement strengthens India’s Act West policy and complements its broader FTA-driven trade strategy.

Trade Agreements & Labour Mobility:
● Comprehensive Economic Partnership Agreement (CEPA): A deeper form of FTA covering goods, services, investment, and mobility.
● Mode 4 (WTO–GATS): Movement of natural persons supplying services; Oman has enhanced commitments for Indian professionals.
● Key reform: Intra-Corporate Transferees quota raised from 20% to 50%; Contractual Service Suppliers’ stay extended from 90 days to two years, extendable further.
● Gulf Cooperation Council (GCC): Includes Oman, UAE, Saudi Arabia, Qatar, Kuwait, and Bahrain—crucial for India’s energy and diaspora interests.
● CEPA aligns with India’s goal of export diversification, services-led growth, and skilled labour mobility.
● Environmental Democracy: The agreement promotes transparency and public participation in environmental decision-making processes.
● EIA Notification: Both countries commit to following proper environmental impact assessment procedures for major projects.
● Polluter Pays Principle: The CEPA incorporates this principle to ensure responsible environmental practices in trade and investment.
● Precautionary Principle: This principle is applied to address potential environmental risks in bilateral economic activities.

The India-Oman CEPA represents a significant step towards strengthening economic ties while also addressing environmental concerns. By incorporating principles like the polluter pays principle and precautionary principle, the agreement sets a precedent for environmentally responsible trade partnerships. The inclusion of environmental impact assessment requirements and the promotion of environmental democracy demonstrate a commitment to sustainable development in both nations.