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30-04-2024
Bureau Report + Agencies
NEW DELHI: India and Oman will sign a trade deal in the coming months, two Indian government officials said, as New Delhi seeks to expand its ties in the Middle East, where rising tensions are putting major shipping routes at risk.
“It will help India with a strategic partner and access to key trade routes in a volatile region,” one official told media.
India and Oman have annual trade of less than $13 billion, but the relationship is important for New Delhi as the Gulf nation is a gateway to the narrow Strait of Hormuz between Oman and Iran, a major transit point for global oil shipments.
Israel’s war against Hamas in Gaza has spread to hostilities with Iran, and Yemen’s Iran-aligned Houthi militants have launched repeated drone and missile strikes in the Red Sea area, claiming solidarity with the Palestinians in Gaza.
The trade deal requires the approval of the government that wins India’s ongoing national elections, whose results are to be announced on June 4, the officials said. Prime Minister Narendra Modi is widely expected to win a rare third term.
The officials asked not to be named as the discussions are private.
India’s trade and foreign ministries and Oman’s embassy in India and foreign ministry did not respond to emails seeking comment.
Making little progress on a deal with the Gulf Cooperation Council (GCC), India has pivoted to seeking bilateral deals with GCC member nations such as Oman and United Arab Emirates.
The planned deal with Oman “also gives a competitive edge as GCC is negotiating trade agreements with Pakistan and China,” the official said.
Oman has agreed to eliminate duties on Indian exports worth an annual $3 billion including agricultural products, gems and jewelry, leather, automobiles, medical devices, engineering products and textiles, the officials said
India has agreed to reduce duties on some petrochemicals, aluminum and copper from Oman, while capping imports of such goods, the officials said.
The Israel-Hamas war has raised the specter of a wider regional conflict which could embroil Iran and other regional factions.
Analysts and market observers say the conflict could prompt the United States to tighten sanctions on Iran, which may spur Tehran to take retaliatory action against ships in the Strait in Hormuz.
The Marshall Islands registry, one of the world’s top shipping flags, last week flagged that vessels, opens new tab with links to Israel or the United States may face a heightened threat of attack within Israeli territorial waters, the Mideast Gulf, Strait of Hormuz, Gulf of Oman and Red Sea areas.
The strait lies between Oman and Iran.
It links the Gulf north of it with the Gulf of Oman to the south and the Arabian Sea beyond. It is 21 miles (33 km) wide at its narrowest point, with the shipping lane just two miles (three km) wide in either direction.
The United Arab Emirates and Saudi Arabia have sought to find other routes to bypass the Strait, including building more oil pipelines.
About a fifth of the volume of the world’s total oil consumption passes through the Strait on a daily basis. An average of 20.5 million barrels per day (bpd) of crude oil, condensate and oil products passed through Hormuz in January-September 2023, data from analytics firm Vortexa showed.
OPEC members Saudi Arabia, Iran, the UAE, Kuwait and Iraq export most of their crude via the Strait.
Qatar, the world’s biggest liquefied natural gas (LNG) exporter, sends almost all of its LNG through the Strait.
