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Comprehensive Economic Partnership Agreement has been signed between India and Oman. This is a kind of free trade agreement, which is a modern agreement promoting the movement of goods, services, investment and professionals. Now when there is trade between the two countries i.e. import and export, there will be no duty of any kind on it. This trade will be completely duty free.
Duty free trade is an important part of free trade agreements, in which participating countries completely eliminate import duties or tariffs on each other’s exports. This reduces trade barriers such as quotas and licensing, allowing exporters to access the market at cheaper prices.
Question – What is FTA, when and under what conditions do these two countries do it?
– This is an agreement between two or more countries, in which they completely or mostly remove tariffs (customs duties), quotas (quantity limits), subsidies and other restrictions on import and export. This makes trade in goods and services between countries easier and cheaper. Duty free trade means that there are no customs duties on eligible goods between the countries involved in the agreement, meaning they can buy and sell without additional taxes.
Countries engage in such trade among themselves when they see economic benefits, such as increasing exports, creating jobs, providing cheaper goods to consumers, opening up markets, and increasing competition. Typically, countries sign FTAs when they want to build stronger economic ties with each other, such as neighboring countries or major trading partners.
Question – When did FTA start and how prevalent is it?
– The first free trade agreement in the world began in 1860 as the Cobden-Chevalier Treaty between Britain and France, which reduced trade barriers among European countries. After World War II, GATT established the multilateral trade framework in 1947, which became WTO in 1995.
Question – What are these GATT and WTO?
– The full name of GATT is General Agreement on Tariffs and Trade, which is called General Agreement on Tariffs and Trade. It was a multilateral trade agreement signed in Geneva by 23 countries in 1947, which came into effect from 1 January 1948.
The main goal of GATT was to promote international trade by reducing or eliminating tariffs, quotas and other trade barriers. It ensured protection through non-discriminatory trade and tariffs. In 1995 it changed to WTO i.e. World Trade Organization. India was a member since 1948.
Question – How many countries are doing business under FTA?
– There are more than 350 active FTAs in the world by 2025, including bilateral and regional agreements that complement the WTO. Now countries like EU, US have dozens of FTAs.
Question – What does FTA include?
– FTAs provide duty free access to most goods and services (often 90-99%), although sensitive sectors such as agriculture, dairy or pharma may be given protection. It increases bilateral trade, creates employment and stimulates economic growth.
Question – With how many countries has India signed FTAs so far?
– India has so far signed FTAs with 16 countries and territories, which include Sri Lanka, Bhutan, Thailand, Singapore, Malaysia, Korea, Japan, Australia, UAE, UK, Mauritius and ASEAN. Recent agreements like EFTA (with Switzerland, Norway etc.) and UK with effect from 2025 provide India duty free benefits on 99% of exports. Five new FTAs were signed after 2014.
Question – How is the bilateral trade between India and Oman?
– Bilateral trade between India and Oman reached $10.61 billion in FY25, in which India had an export deficit. India mainly exports petroleum products, engineering goods, metal ores and chemicals to Oman, while Oman imports mineral fuels, fertilizers, organic chemicals and plastics.
India exports petroleum products, engineering goods, mica, coal and other ores, chemicals, rice, aluminum oxide, agricultural products, textiles and pharmaceuticals to Oman. Whereas crude oil, fertilizers, organic chemicals and plastics come to India from Oman.
Question – Why and when was this agreement made?
– Talks related to this started in November 2023. To be completed in 2025. It is expected to be implemented from the first quarter of 2026. This agreement strengthens India’s economic presence in the Gulf region.
Question – What rules do countries have to follow to join FTA?
– To make goods duty free, those goods should be manufactured in those countries which are making this agreement. These should be in line with rules related to health, environment, labor standards and protection of intellectual property. That means where these goods are being manufactured, they are fully following these norms. The agreement must be consistent with WTO rules, such that it does not impose new restrictions on other countries.
Question – How many countries impose tariffs on Indian goods?
– Almost all 190+ WTO member countries impose tariffs on India’s export products, although the rates vary depending on the product and FTA. Some countries like America have increased additional tariffs on Indian goods (steel, pharma, auto) by 25-26% in 2025.
US – up to 25% on Indian exports (effective from 2025) plus an additional 25%
EU- average 5-10%, more in some areas
China – average 8-15%, higher on competing products
There is 0% tariff on most Indian goods in 16+ FTA countries, but an average of 5-20% tariff is applicable in non-FTA countries (150+). Overall, more than 80% of the world’s trading partners impose tariffs, but export growth remains intact.
Question – How many countries does India impose tariffs on?
– India also imposes import duties i.e. tariffs on all 190+ WTO member countries and other trading partners, because under WTO rules it has the right to impose tariffs on the imports of all countries. While 16+ FTA countries have 0% tariffs on most goods, non-FTA countries (150+) have an average tariff of 5-20%.
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