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

The recent progress on a trade agreement between India and the Sultanate of Oman, particularly India's strategic exclusion of sensitive domestic sectors like dairy, gold, silver, and footwear from duty concessions, offers a fascinating insight into India's evolving economic diplomacy and trade policy. This move is not merely an isolated trade decision but reflects a broader pattern of India balancing its commitment to global trade liberalization with the imperative of protecting domestic industries and livelihoods, aligning with the "Atmanirbhar Bharat" (self-reliant India) vision.

**Background Context and What Happened:**

India has been actively pursuing Free Trade Agreements (FTAs) and Comprehensive Economic Partnership Agreements (CEPAs) with various countries and blocs to boost its exports, secure supply chains, and foster economic growth. This push gained momentum after India opted out of the Regional Comprehensive Economic Partnership (RCEP) in 2019, signalling a preference for bilateral agreements that offer greater flexibility to safeguard national interests. Oman, a strategic partner in West Asia, holds significance for India due to its geographical proximity, energy resources, and role in regional connectivity. Bilateral trade between India and Oman stood at approximately USD 12.38 billion in FY 2022-23, with India being one of Oman's largest trading partners.

The core development is India's decision to exclude key sensitive items – dairy products, gold, silver, and footwear – from duty cuts in the proposed trade pact with Oman. This means these products, if imported from Oman, will not benefit from reduced tariffs, thereby maintaining a level playing field for Indian producers. This protectionist measure is specifically aimed at shielding Indian farmers, particularly in the dairy sector, and small and medium-sized enterprises (SMEs) engaged in footwear, gold, and silver manufacturing, from potential competition from Omani imports. In a reciprocal arrangement, Omani exports to India will receive limited duty benefits under a carefully defined quota system, ensuring that benefits are extended without overwhelming Indian markets. A significant win for India is Oman's agreement to allow Indian firms to import marble blocks, an item previously under import restrictions, which could benefit India's construction and stone processing industries by securing raw material access.

**Key Stakeholders Involved:**

On the Indian side, the **Ministry of Commerce and Industry** is the primary negotiator. However, the impact extends to various domestic stakeholders: **Indian farmers** (especially dairy farmers) whose livelihoods could be affected by cheaper imports; **small and medium businesses** in the footwear, jewelry, and silver sectors; and **consumers**, who might see price stability in these protected goods. On the Omani side, the **Omani Ministry of Commerce** and various Omani exporters stand to gain from increased market access to India, albeit with limitations. The **marble industry** in Oman will see new export opportunities, while Indian firms will benefit from raw material imports.

**Why This Matters for India:**

This trade agreement is significant for several reasons. Firstly, it showcases India's evolving **economic diplomacy**, demonstrating a nuanced approach where trade liberalization is pursued strategically, not blindly. It underscores a shift towards protecting vulnerable domestic sectors, aligning with the "Make in India" and "Atmanirbhar Bharat" initiatives, which prioritize domestic manufacturing and self-reliance. Secondly, it strengthens India's **"Look West" policy**, deepening economic ties with a crucial West Asian nation. Oman is a key partner in energy security, and robust trade relations contribute to overall strategic stability. Thirdly, the access to Omani marble blocks provides a critical raw material input for India's construction and stone industries, potentially reducing import costs and boosting domestic processing. Fourthly, by carefully managing import tariffs on sensitive goods, India aims to mitigate adverse social impacts on millions of farmers and small business owners, thereby ensuring inclusive growth.

**Historical Context and Future Implications:**

India and Oman share a centuries-old history of trade and cultural exchanges. In modern times, their relationship has evolved into a strategic partnership, with cooperation spanning defence, energy, and trade. This trade pact builds upon existing frameworks and demonstrates a continued commitment to enhancing economic collaboration. Historically, India has often faced challenges balancing its multilateral trade commitments (e.g., under WTO) with domestic protectionist demands. This bilateral agreement reflects a pragmatic approach to navigating these complexities.

The future implications are substantial. This agreement could serve as a template for India's future trade negotiations, emphasizing sector-specific exclusions and quota systems to safeguard national interests. It is likely to boost bilateral trade volumes, diversify India's export basket, and attract Omani investments into India. Furthermore, by strengthening economic ties with Oman, India reinforces its geopolitical standing in the Arabian Sea region, which is crucial for maritime security and connectivity. This balanced approach to trade liberalization is expected to foster sustainable growth for Indian industries while expanding market access for its goods and services globally. Such agreements also help in building resilient supply chains, a lesson learned from recent global disruptions.

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

India's ability to enter into and implement international trade agreements is rooted in its constitutional framework. **Article 253** of the Indian Constitution empowers Parliament to make laws for implementing any treaty, agreement, or convention with any other country or any decision made at any international conference, association, or other body. This provides the legislative backing for such trade pacts. The **Foreign Trade (Development and Regulation) Act, 1992**, and the **Foreign Trade Policy** (formulated by the Directorate General of Foreign Trade - DGFT under the Ministry of Commerce and Industry) govern India's import and export policies, including tariff structures and specific restrictions or concessions outlined in trade agreements. The strategic exclusions in the Oman pact align with the broader objectives of the **"Atmanirbhar Bharat Abhiyan"**, launched in 2020, which emphasizes self-reliance and the strengthening of domestic capabilities across various sectors. Furthermore, India's commitments under the **World Trade Organization (WTO)**, particularly the Most Favoured Nation (MFN) principle and provisions for regional trade agreements, provide the international legal framework within which such bilateral pacts operate, ensuring they are consistent with global trade rules.