New Delhi and Muscat to craft a trade deal in the coming months. New Delhi seeks to expand its ties in the Middle East amidst the rising tensions that 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, the Indian government officials said.
The two countries have an annual trade of less than $13 billion, but with rising tensions in the Middle East, the Gulf nation can serve as a gateway to the strait of Hormuz between Oman and Iran, which serves as a major transit point for global trade.
The potential trade deal between India and Oman seems to be driven by both economic and strategic considerations for India. India is looking to strengthen ties with the Middle East region, which is crucial for its energy imports and hosts a large Indian diaspora. A deal with Oman can expand India’s footprint in this vital area. With rising tensions in the Middle East, securing access to shipping lanes like the Strait of Hormuz is a priority for India.
Oman’s location near the Strait makes it an important partner in ensuring uninterrupted trade flows. The Strait is a critical chokepoint for global oil shipments, with around a third of the world’s crude oil transported through this narrow waterway. Any disruption here can severely impact global energy supplies and prices, which imports over 80% of its crude requirements, a substantial portion comes from the Gulf region. Ensuring freedom of navigation through Hormuz is of immense strategic importance.
Cultivating ties with Oman
which has reasonably stable relations with Iran, could give India more leverage in negotiating safe passage during crises.The escalating conflicts in the Middle East have destabilized the region, with frequent attacks on oil facilities and flare-ups between the U.S. and Iran. This volatility risks India’s energy security and diaspora’s safety. Strengthening economic cooperation with Oman through a trade deal can reinforce India’s strategic positioning and allies who can negotiate neutral approaches during regional turmoil. Stable Oman relations could give India more diplomatic heft in addressing future Hormuz crises.
While annual India-Oman trade is currently under $13 billion, the deal could diversify India’s trade partners and open opportunities for businesses. For Oman, partnering with rising India offers economic benefits like access to a huge market and investments. India’s regional clout can also counterbalance potential Iranian disruptions near Hormuz. The proposed pact may cover sectors like mining, renewable energy and financial services. Officials expect it could elevate bilateral trade beyond $20 billion annually in the coming years.
However, the path has challenges – reaching compromises on issues like visas, investment protections and market access won’t be easy. Geopolitical tensions surrounding Iran’s nuclear program and involvement of external powers like the U.S., Russia and China add complications.Both countries will need to carefully navigate their engagements to avoid antagonising other regional players. Nonetheless, economic and strategic incentives are driving New Delhi and Muscat closer. As India seeks a more proactive regional role, robust Oman ties could prove valuable. The proposed trade pact seems a vital step in that direction.
