India flags concern over trade lines, potential Chinese product dumping in Oman FTA talks

by Dhirendra Kumar, Rhik Kundu

New Delhi: India has raised concerns that China could use Oman to dump goods into the Indian market, even as talks on a free trade agreement (FTA) with the West Asian nation have resulted in an agreement on over 200 trade lines, two people aware of the matter said.

However, Oman wants to expand the agreement to about 500 trade lines, but Indian, it is understood, are not in favour of the move.

Talks on the long-pending trade agreement, officially known as the Comprehensive Economic Partnership Agreement (CEPA), were completed in March. the agreement has hit a deadlock as Oman has requested revisions to India's market access offer for specific products.

"The West Asian country remains firm on its demand for market access to a range of additional products, which cannot be included in the list under the agreed terms of reference," the first person mentioned above said, requesting anonymity.

The proposed pact aims to eliminate duties on key products, including petroleum, textiles, electronics, pharmaceuticals, machinery, and iron and steel, thereby fostering trade ties and economic cooperation.

Third export destination

While Oman is India's third-largest export destination among Gulf Cooperation Council (GCC) countries, more than 80% of Indian exports to Oman attract an average 5% import duty.

Oman's import duties range from 0% to 100%, along with other specific duties.

A 100% duty applies to certain meats, wines, and tobacco products.

The FTA is also expected to help Oman diversify its economy away from oil exports by granting preferential access to Indian goods and services.

"India sees an immediate benefit from finalizing the FTA with Oman in the establishment of manufacturing units dedicated to exporting green products," the second person mentioned above said.

"This move is aimed at addressing the challenges posed by the EU's Carbon Border Adjustment Mechanism (CBAM)," the person added, referring to the looming EU tax on embedded carbon emissions in products such as steel and aluminium. The so called carbon tax is expected to impact Indian exports to Europe.

Spokespersons of the Ministry of Commerce and the embassies of Oman and China didn't respond to emailed queries.

As things stand, Oman seeks to include a range of new products in the FTA discussions, focusing on sectors like agricultural goods, processed foods, chemicals, plastics, and certain services.

Products that attract high tariffs include premium dates for luxury markets, exotic spices, gourmet confectioneries, and others.

China may dump

Indian officials say China may be tempted to dump its goods - that is, sell them at below cost pricce - on India in response to the EU, which is China's second-largest trading partner, imposing steep tariffs on Chinese products. The US too is planning similar moves under the new administration led by President Donald Trump.

The EU move aims to address concerns over Chinese state subsidies, which allegedly provide manufacturers with an unfair advantage and the fact that Chinese producers hold more than 55% market share in certain categories, much higher than their European counterparts.

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"The high tariff barriers imposed by Europe and the US on Chinese products have raised concerns about the Asian giant seeking alternative routes to access global markets," the first person mentioned above said.

"Among these possibilities, there is growing apprehension that China might use intermediary nations to bypass trade restrictions and dump its products into other economies," the person added.