GS2
International Relations
15 marks
India recently signed a Comprehensive Economic Partnership Agreement (CEPA) with Oman. Examine the key features of the India–Oman CEPA and analyse its strategic and economic significance for India’s West Asia trade policy. Also discuss the challenges associated with the agreement.
A Comprehensive Economic Partnership Agreement (CEPA) is a deep trade agreement covering goods, services, investment, mobility, and regulatory cooperation. The India–Oman CEPA, India’s second major trade pact in West Asia after the UAE, marks a significant step in India’s strategy of diversifying trade partners and strengthening its footprint in the Gulf region.
Key Features of India–Oman CEPA
Strategic and Economic Significance
a. Trade diversification: Reduces India’s dependence on the US and EU, where exports face carbon-linked barriers like CBAM. b. Gateway to West Asia and Africa: Oman’s proximity to the Strait of Hormuz and ports like Duqm and Sohar enables re-export and logistics integration. c. Strategic foothold in GCC: Along with the UAE CEPA, it strengthens India’s position despite stalled India–GCC FTA talks. d. Services-led growth: Taps Oman’s USD 12.5 billion services import market, where India remains underrepresented. e. Energy security: Ensures stable access to crude oil, LNG, fertilisers and petrochemicals amid global energy volatility.
Challenges
The India–Oman CEPA is a strategic trade instrument, not merely a tariff agreement. By developing Oman as a re-export hub, upgrading value-added exports, deepening services and skills integration, and aligning CEPA benefits with domestic schemes like PLI and MSME clusters, India can maximise gains. If effectively implemented, the agreement can transform Oman into a critical economic bridge between India, the Gulf and Africa, reinforcing India’s resilience amid global trade uncertainties.
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