West Asia Trade: India-Oman CEPA Provisions & Impact Analysis for UPSC
Q. With reference to the 'Comprehensive Economic Partnership Agreement (CEPA)' between India and Oman, consider the following statements:
1. Only 50% of India's current export value to Oman will gain duty-free access under this agreement.
2. The agreement includes a first-of-its-kind provision for the mobility of industrial workers in non-services sectors.
3. Domestic dairy and cereal products are part of the 'Exclusion List' to protect Indian farmers.
Which of the statements given above are correct?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
Context
The Comprehensive Economic Partnership Agreement (CEPA) between India and Oman signifies a landmark expansion of India's footprint in West Asia. Signed to deepen bilateral economic integration, the deal aims to leverage the USD 10.61 billion bilateral trade (FY 2024–25) by eliminating trade barriers and facilitating professional mobility.
What is the India–Oman CEPA?
A CEPA is a wide-ranging trade pact that goes beyond traditional goods trade to cover services, investment, government procurement, and regulatory cooperation.
- Scope: Includes Trade in Goods, Services, Investment, Professional Mobility, and Technical Barriers to Trade (TBT/SPS).
- Status: Secure 100% duty-free market access for Indian exports across 98.08% of tariff lines from Day One.
Key Points:
- Immediate Gains: 99.38% of India’s export value to Oman will enter duty-free.
- Improved Performance: Currently, only 15.33% of India's exports enter Oman at zero duty under the MFN regime.
- Services Depth: Oman has committed to market access across 127 services sub-sectors.
Strategic Pillars of the Agreement
1. Market Access in Goods
India gains an edge over competitors in a USD 28 billion import market.
- Key Sectors: Engineering goods, chemicals, textiles, plastics, and gems & jewellery.
- Engineering Gains: All products (machinery, automobiles, steel) move from 0–5% duties to binding zero-duty access.
2. The Services Frontier
Oman has offered "GATS/Best FTA-plus" commitments to Indian service providers.
- ICT Ceiling: The Intra-Corporate Transferees (ICT) ceiling has been raised from 20% to 50%, allowing Indian MNCs to deploy more specialists.
- Professional Categories: For the first time, Oman has committed to specific categories like doctors, engineers, IT professionals, and consultants.
- Traditional Medicine: A dedicated annex covers cooperation in health and traditional medicine.
3. Pharmaceutical Fast-Tracking
Oman recognizes India as a global pharmacy.
- Quick Authorization: Pharmaceutical products approved by stringent regulators (USFDA, EMA, etc.) will receive marketing authorization within 90 days.
- Bound Duties: Zero-duty access for finished medicines and active pharmaceutical ingredients (APIs).
Safeguards and Calibrated Liberalization
To protect domestic farmers and sensitive industries, India has adopted an Exclusion List:
- Protected Items: Dairy products, cereals, fruits, vegetables, oilseeds, and natural honey are excluded from immediate tariff concessions.
- Sensitive Industries: Rubber, petroleum oils, and certain textiles are placed in the exclusion list to safeguard manufacturing competitiveness.
Significance
- Gateway to the Gulf: Oman serves as a strategic gateway for Indian products to the wider Gulf Cooperation Council (GCC) and African markets.
- State-Wise Gains: Significant export opportunities for states like Gujarat (Potatoes), Uttar Pradesh (Meat), Punjab (Honey), and Tamil Nadu (Eggs).
- Strategic Mobility: A first-of-its-kind provision on mobility in Non-Services sectors protects Indian industrial workers from the unpredictability of "Omanisation" policies.
- Employment: Boosts labor-intensive clusters in Surat, Tirupur, Ludhiana, and Jaipur by improving price competitiveness in the global market.
🎯 Analysis & Insights
Prelims mastery
Correct Answer: (c) 2 and 3 only.
Reasoning: Statement 1 is incorrect because the CEPA secures 100% duty-free access for 99.38% of India's export value. Statement 2 is correct; it offers binding assurances for Indian industrial workers. Statement 3 is also correct as dairy and cereals are in the exclusion list.
Mains perspective
"The India-Oman CEPA marks a shift from a merchandise-only relation to a deep-integrated economic partnership." Discuss how this agreement strengthens India's strategic autonomy and economic presence in the West Asian region. (150 words)