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India has signed a comprehensive economic partnership agreement with Oman as part of its broader strategy to mitigate the impact of steep U.S. import tariffs and diversify export destinations amid growing global trade uncertainties.
The agreement, signed Thursday in Muscat in the presence of Indian Prime Minister Narendra Modi and Oman’s Sultan Haitham bin Tarik, marks India’s second free trade agreement in six months, following a similar deal with the United Kingdom in May.
Under the new pact, Indian goods will gain zero-duty market access on 98.08% of Oman’s tariff lines, significantly benefiting sectors such as engineering, textiles, leather, pharmaceuticals, and agriculture. In return, India has offered Oman tariff liberalization on 77.79% of its tariff lines, covering approximately 95% of its imports from the Gulf nation.
India has accelerated efforts to finalize several free trade agreements (FTAs) in recent months, with advanced negotiations underway with the European Union, New Zealand, and Chile, among others. These agreements represent a central pillar in India’s economic strategy as it seeks deeper integration into global supply chains and stronger export growth.
“India is clearly using FTAs as a strategic tool to diversify export markets and soften the impact of steep and uncertain U.S. tariffs,” noted trade analyst Ajay Srivastava. The country currently has 15 free trade agreements covering 26 countries and six preferential trade agreements with another 26 nations, while negotiating with more than 50 additional partners.
The push for new trade deals comes as Indian exporters face pressure from higher U.S. import tariffs of 50%, which took effect in August. These tariffs have particularly affected sectors like textiles, auto components, metals, and labor-intensive manufacturing.
Once ongoing negotiations conclude, India will have trade agreements with virtually all major global economies except China, according to Srivastava. Recent agreements with the United Arab Emirates and Australia have already boosted bilateral trade with both countries.
The May agreement between Britain and India represented a significant breakthrough that will slash tariffs on products including Scotch whisky and English gin shipped to India, and Indian food and spices sent to the UK.
Despite the progress, challenges remain as Indian negotiators balance protecting small farmers and domestic industries against trading partners’ demands for greater market access.
India’s trade relationship with the United States has been particularly complex. The two countries had hoped to finalize the first tranche of a bilateral trade agreement by autumn, but progress stalled amid tensions over India’s continued purchase of discounted Russian crude oil, which Washington claims helps fund Moscow’s war in Ukraine.
However, recent developments suggest improving relations. Modi praised Trump’s peace plan for the Russia-Ukraine conflict, and the two leaders recently spoke by phone about mutual interests, including trade. A U.S. delegation led by Deputy Trade Representative Rick Switzer visited New Delhi last week for talks with Indian officials on economic partnership and trade opportunities.
Similar high-level trade discussions have taken place with New Zealand’s Trade Minister Todd McClay and EU Trade Commissioner Maroš Šefčovič, who both met with Indian Trade Minister Piyush Goyal last week to review progress on respective free trade negotiations.
“India is negotiating several FTAs at a time of challenges in global trade,” Trade Secretary Rajesh Agarwal told reporters this week. “I see positive progress on several of these, next year.”
With global trade increasingly shaped by tariff disputes and geopolitical tensions, India’s expanding network of trade agreements appears strategically positioned to help cushion external shocks and support its export ambitions in an uncertain international economic environment.
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10 Comments
The acceleration of India’s FTA negotiations is a clear sign of its intent to reduce reliance on the US market and diversify its trading partners. This could create new opportunities for Indian exporters in sectors like metals and mining.
It will be worth monitoring how this Oman deal and other FTAs impact India’s import and export dynamics for key commodities and resources.
India’s shift towards more free trade agreements is a pragmatic response to the protectionist policies of the US. Reducing tariffs and barriers with trade partners can help boost exports and economic growth.
It will be interesting to see how this Oman deal and other FTAs impact India’s trade balance and competitiveness in key export sectors.
India seems to be taking a proactive approach to shielding its economy from US tariffs by rapidly expanding its network of free trade deals. This could have significant implications for global supply chains and commodity flows.
The strategic importance of the Oman agreement for India’s energy and mining sectors should not be overlooked, given Oman’s position as a regional energy hub.
Curious to see how the Oman deal compares to India’s FTA with the UK in terms of tariff liberalization and market access. These trade agreements could provide useful data points for assessing India’s negotiation strategies.
The diversification of India’s trade relationships beyond the US and China is a prudent move in the current global economic climate.
Interesting move by India to counter US tariffs through free trade deals. Diversifying export markets and gaining tariff-free access to Oman’s market could benefit Indian industries like textiles, engineering, and pharmaceuticals.
Accelerating FTA negotiations with other countries like EU, NZ, and Chile also seems like a smart strategy for India to expand its global trade footprint.