India has been on tenterhooks for months now, awaiting the Bilateral Trade Agreement (BTA) with the US. The general belief is that it will be the antidote to India’s trade and economic worries and, more importantly, the only way to make Donald Trump dial down his tariff tirade aimed at New Delhi.
After all, the US is India’s biggest trade partner, and the understanding when Prime Minister Modi visited Trump back in February was to double this bilateral trade to half a trillion dollars before this decade is through.
While half the world waits it out, India has not exactly been sitting all dressed up and having nowhere to go. It has been sewing up trade deals left, right, and centre, the latest one being last weekend’s Comprehensive Economic Partnership Agreement (CEPA) with the Persian Gulf sultanate of Oman.
This deal, for which PM Modi flew to Oman’s capital Muscat, offers a plethora of areas open for Indian business and trade, from IT services, business and professional services, and audio-visual services to R&D services, education, and health sectors. The operative part here is that this is not just a deal for goods, but for immense business and job opportunities. There are liberalised entry and stay provisions for professionals ranging from accounting and architecture to—very significantly for India—medical services. And as for goods trade, the agreement covers 98% of Oman’s tariff lines and 99.38% of India’s total export value to Oman.
The Oman CEPA is only the second to be signed by India this year, following that with the UK back in the summer. And even in the Gulf region, it is India’s second one, following a similar deal with the United Arab Emirates three years ago.
India’s free trade overtures may now be on overdrive, and naturally so, but it wasn't the case for the longest time. The ASEAN deal back in 2003 was perhaps the only major free trade deal India tried, and its drawbacks haunted New Delhi’s policy planning for long. The general feeling was that India’s plum sectors, like agriculture, steel, and electronics, did not get fair access, while the flooding of Chinese products through ASEAN countries like Thailand—because of the lack of stringent ‘Country of Origin’ rules—devastated local businesses to a large extent. A classic example of this is how the free trade talks with the European Union lagged on for years and years; they were virtually given up for good by 2013, only to be revived in 2022 as geostrategic equations changed for both entities.
For India, the change that spawned the need for wide-ranging trade deals was not Trump’s tariffs, but its worsening relationship with China, which led to India walking out of the RCEP, a China-led trade bloc which is today the world’s biggest. Getting out of it meant India had to find alternatives real soon, and that led to a whole range of talks, some of which—like those with Australia, Oman, and the UK—have fructified real quick. The EU deal is said to be in its last stages, with Commerce Minister Piyush Goyal set to fly to Brussels next fortnight.
While there is tension over the delay in a deal with the US, the fact is that these recent treaties have provided a stimulus not just for the GDP bottom line, but have spurred business and professional ties that the nation will stand to gain from in the coming years. It is time for India to walk the talk, and the new year could well see the icing on the cake: deals with the EU as well as the US.
