India excludes dairy, gold, silver, footwear from trade pact with Oman

India's strategic decision to exclude sensitive products like dairy, gold, silver, and footwear from its ongoing Comprehensive Economic Partnership Agreement (CEPA) negotiations with Oman marks a significant development in its evolving trade policy. This move, confirmed by the Commerce Ministry, is a clear signal of India's commitment to safeguarding its domestic interests and aligns with a more cautious and calibrated approach to Free Trade Agreements (FTAs) post-RCEP withdrawal.

**Background Context and What Happened:**

India has been actively pursuing FTAs and CEPAs with various countries and blocs to boost its trade and integrate into global supply chains. The Gulf region, particularly Oman, is a crucial partner for India due to its strategic location, energy resources, and significant Indian diaspora. India and Oman have a long-standing relationship, with bilateral trade reaching approximately USD 12.38 billion in FY 2022-23. The CEPA negotiations aim to further liberalize trade in goods and services, and enhance investment flows. However, India's Commerce Ministry recently announced that it has placed certain 'sensitive products' in an exclusion category, meaning no concessions would be offered on these items within the trade pact. The specific products identified are dairy, gold, silver, and footwear.

**Key Stakeholders Involved:**

1. **India's Commerce Ministry:** As the primary negotiator, the Ministry is responsible for formulating and executing India's trade policy, balancing the interests of domestic industries with the benefits of international trade. Its decision reflects a careful assessment of national economic priorities.

2. **Domestic Industries (Dairy, Gold, Silver, Footwear):** These sectors are the direct beneficiaries of this protectionist measure. The Indian dairy sector, largely unorganized, supports millions of rural livelihoods and small farmers. The gold and silver industry includes numerous small artisans and jewellers, while the footwear industry is a significant employer, particularly in the MSME sector. Unrestricted imports in these areas could severely impact their competitiveness and employment.

3. **Indian Consumers:** While protection can help domestic industries, it might also lead to higher prices for consumers if cheaper imports are restricted. However, it also ensures the availability of domestically produced goods and supports local value chains.

4. **Oman:** As India's negotiating partner, Oman seeks greater market access for its products and services in India. The exclusion of these categories might require Oman to re-evaluate its demands or seek concessions in other areas to achieve a balanced agreement.

5. **Indian Parliament:** Ultimately, any international treaty or agreement, especially those with significant economic implications, would require parliamentary scrutiny and approval, particularly concerning legislative changes needed for implementation.

**Why This Matters for India and Historical Context:**

This decision is critical for several reasons. Firstly, it underscores India's evolving trade philosophy, which prioritizes national interest and the protection of vulnerable domestic sectors. This approach has gained prominence after India's withdrawal from the Regional Comprehensive Economic Partnership (RCEP) in November 2019, largely due to concerns about potential adverse impacts on its agricultural and manufacturing sectors from cheap imports, especially from China. The current stance reflects a lesson learned from past trade agreements where some sectors felt disadvantaged.

Secondly, it aligns strongly with the government's 'Atmanirbhar Bharat Abhiyan' (Self-Reliant India Campaign) launched in May 2020. By safeguarding sectors like dairy and footwear, India aims to bolster domestic manufacturing, create jobs, and reduce import dependence. The dairy sector, with its deep rural linkages, is particularly sensitive. Protecting it ensures livelihood security for millions of farmers. Similarly, the footwear and artisan-based gold/silver industries are crucial for employment and traditional craftsmanship.

Thirdly, this move provides a template for India's future FTA negotiations, signalling to other potential partners that India will not shy away from ring-fencing its sensitive industries. This pragmatic approach ensures that trade agreements are mutually beneficial and do not disproportionately harm domestic producers.

**Related Constitutional Articles, Acts, or Policies:**

India's power to enter into and implement international treaties stems from the Constitution. **Article 246** of the Constitution, under the Seventh Schedule (Union List, Entry 41), grants the Union Parliament exclusive power to legislate on matters related to 'Trade and commerce with foreign countries; import and export across customs frontiers; customs duties.' Furthermore, **Article 253** empowers Parliament to make any law for implementing any treaty, agreement or convention with any other country or any decision made at any international conference, association or other body. The **Foreign Trade (Development and Regulation) Act, 1992**, provides the statutory framework for the government's foreign trade policy. The policy decision is also deeply rooted in the broader economic policy framework of 'Atmanirbhar Bharat' and 'Make in India' initiatives, which aim to boost domestic production and reduce reliance on imports.

**Future Implications:**

This strategic exclusion could influence the pace and final contours of the India-Oman CEPA. While it might lead to more prolonged negotiations as Oman seeks reciprocal benefits, it also ensures a more balanced outcome from India's perspective. Moreover, this approach is likely to be replicated in India's ongoing and future CEPA/FTA negotiations with other countries and blocs, such as the UK, EU, and Australia. It signals a shift towards 'smart FTAs' that are tailored to India's specific economic vulnerabilities and strengths, ensuring that trade liberalization benefits rather than harms domestic growth and employment. The long-term implication is a stronger, more resilient Indian economy less susceptible to global price fluctuations and import surges in critical sectors, fostering sustainable growth and development within the country.