India and Oman are intensifying their economic cooperation through the expedited discussions of a Comprehensive Economic Partnership Agreement (CEPA). This initiative comes as both nations seek to bolster their trade relations.
Recent Developments
- During a visit to Oman by India’s Commerce and Industry Minister, Piyush Goyal, several key agreements were reached between the two countries.
- Notably, they signed a protocol amending the Double Taxation Avoidance Agreement (DTAA), which was initially implemented in 1997. This amendment brings the agreement in line with international standards and aims to streamline tax procedures for businesses operating in both countries.
What is DTAA?
The Double Tax Avoidance Agreement (DTAA) is a tax treaty between two countries designed to:
- Prevent individuals and businesses from being taxed twice on the same income.
- Distribute taxing rights between the two countries, providing clarity on tax liabilities and reducing legal uncertainties.
- Encourage foreign investment and enhance economic cooperation while supporting global financial transparency and preventing illegal tax avoidance.
India-Oman CEPA
The Comprehensive Economic Partnership Agreement (CEPA) between India and Oman is expected to:
- Boost bilateral trade and investment.
- Minimize or eliminate customs duties on certain goods and simplify regulations to enhance trade in goods, services, and investments. Negotiations for the CEPA began in November 2023, reflecting both countries’ desire to deepen their economic ties. India has previously implemented a similar agreement with the United Arab Emirates (UAE), which came into effect in 2022.
Current Trade Statistics
- In the fiscal year 2023-24, India’s exports to Oman were valued at approximately $4.47 billion, while imports from Oman were around $4.5 billion.
- Key imports from Oman include petroleum products and urea, which together make up over 70% of India’s total imports from Oman.
Impact on Bilateral Relations
The CEPA and the amended DTAA are expected to serve as significant milestones in enhancing India-Oman relations. These agreements are poised to facilitate smoother trade and investment flows, benefiting businesses in both nations. Ultimately, they aim to create a more conducive environment for long-term economic collaboration between India and Oman.
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