CEPA Boost: India poised to become key textile supplier to Oman

Negotiations on the Comprehensive Economic Partnership Agreement (CEPA) between India and Oman are proceeding smoothly, with both parties having reached a consensus on most of the text within the proposed CEPA. This CEPA is poised to significantly boost India's textile exports to the Middle Eastern country.

Alongside textiles, various other export sectors stand to benefit from this agreement, including motor gasoline, iron and steel products, electronics, machinery, plastics, boneless meat, essential oils, and motor cars. Currently, these goods face a 5 per cent import duty in Oman.

Oman, which has a relatively small local textile manufacturing sector, has emerged as a substantial market for clothing and textiles. The nation primarily depends on imports to meet its demand for textiles, apparel, home textiles, and footwear. Oman's key sources for these imports include China, India, Indonesia, Thailand, and the United Kingdom.

Figure 1: Oman’s import ranking with India for textile & apparel (T&A) and footwear

Source : TexPro & F2F

Fig 2: India's total exports and textile-based commodities exports (in mn USD)

Source: Directorate General of Commercial Intelligence and Statistics (DGCI&S) and F2F Analysis

Fig 3: India's T&A exports to Oman (in mn USD)

Source: DGCI&S

Apparel stands out as the leading category, contributing 45 per cent of the textile commodities, closely followed by raw textiles at 38 per cent. The remaining 17 per cent is shared by home textiles and footwear, with a split of 9 and 8 per cent respectively.

Oman holds the position of being India's third-largest trading partner within the Gulf Cooperation Council (GCC) region. With the ongoing negotiations for the CEPA, there is significant potential for Indian textile exports to experience a surge. Historically, the share of textile exports from India to Oman has fluctuated between 3 to 4 per cent. However, with the impending CEPA, which aims to reduce the current 5 per cent tariff to zero, there's an opportunity for India to solidify its presence in the region and potentially become one of Oman's top trading partners.

Considering China's dominance in the Middle East trade landscape, a CEPA between India and Oman holds particular significance. This agreement has the potential to elevate India's position in Oman's trade hierarchy. It is anticipated that India could reclaim its status as Oman's primary exporter, a position it held in 2014. This development could pave the way for strengthened economic ties between the two nations.

ALCHEMPro News Desk (NJS)