Oman second biggest GCC investor in India

India’s relations with this country date back to a thousand years. During the past 200 years, the family of Sultan Qaboos bin Said Al Said of Oman has had close relations with India. However, twenty years ago, the trade was not as much between India and Oman as it is today reaching a peak of USD 5.7 billion. It is a big jump. Oman is into many big projects with Indian companies. Oman is investing in solar energy and IT. It is also considering a joint venture in solar energy inSONY DSC Rajasthan. TO know more about the relations between the two countries, THE BLUE MOON Editor, Amit Mittal met the Ambassador of Oman, Mr. Hamed Saif Al-Rawahi for a brief interview. Some excerpts from the talk.

The Sultanate of Oman is a strategic partner for India in the Gulf and an important interlocutor in the bilateral, Gulf Cooperation Council, Arab League and Indian Ocean Rim Association contexts. Oman also accords a high priority to its ties with India.

Which are the important agreements between the two countries so far?

Some prominent existing bilateral agreements are: MoUs on Combating Crime, Cooperation in Agriculture, Civil Aviation, Cooperation between the State Audit Institution of Oman and the office of the Comptroller and Auditor General of India, Bilateral Investment Promotion and Protection, Treaty of Extradition, MoU on Manpower, MoU on Joint Investment Fund and MoU on Cultural Cooperation, etc. At the time of the India-Oman Joint Commission Meeting, agreement on Legal and Judicial Cooperation in Criminal Matters and MoU on Standards and Measures were signed between India and Sultanate of Oman in October 2014 at New Delhi.

India-Oman Economic & Commercial Relations- Overview

Oman is politically stable and prosperous with a state-of-the-art and growing infrastructure and per capita income of US$ 29,800 (2013 estimates). With proven crude oil reserve of 5.5 billion bbl and natural gas reserve of 849.5 billion cubic mtrs (Jan. 2013 estimates), Oman has a robust oil-based economy which is being judiciously diversified to other areas like tourism, agriculture & fisheries, SMEs, and investments abroad. 

Bilateral trade with Oman has steadily grown and it stood at US$ 5.77 bn during the financial year 2013-14. The volume of trade is balanced with Indian imports at US$ 2.8 bn and exports to Oman at US$ 2.9 bn. Major items of Indian exports are mineral fuels, mineral oils and products of their distillation, textiles and garments, machinery and equipment, electrical and electronic items, chemicals, iron and steel products in addition to traditional items like tea, coffee, spices, rice and meat products and seafood. Among the Indian imports are urea, LNG, crude oil (through spot purchase), polypropylene, lubricating oil, dates and chromite ore. India ranked third largest source of imports into Oman after the UAE & Japan, in 2013. An India-GCC framework agreement on trade is in place and negotiations are on for finalization of FTA with GCC. 

What is the quantum of Oman’s investment in India ?

FY Export Import Total Trade % Growth % Share of India’s total trade
2009-10 1032.93 3499.89 4532.82 0.97
2010-11 1086.48 4002.07 5088.55 12.26 0.82
2011-12 1322.13 3345.94 4668.08 -8.26 0.59
2012-13 2599.49 2009.72 4609.21 -1.26 0.58
2013-14 2812.27 2951.18 5763.45 25.04 0.75

 

(India –Oman bilateral trade in US$ million; Source, DGFT)

As per Alpen Capital Investment Bank’s report of May 2012, Oman was placed as the second biggest GCC investor in India and recorded that Oman’s cumulative FDI has grown from US$ 24 million in 2005 to US$ 340 million as of January 2012. Around 1527 Indo-Omani joint ventures have been established in Oman with an estimated investment of US$ 7.5 billion of which Indian investment is estimated to be around US$ 4.5 billion. Institutional mechanisms like Joint Commission Meeting (JCM) and Joint Business Council (JBC) have been set up to oversee economic cooperation between India and Oman. The 7th session of the JCM and the8th JBC (coordinated by FICCI and OCCI) were held in New Delhi in October, 2014 along with Oman-India B2B road shows (coordinated by CII and OCCI) at New Delhi and Mumbai. India-Oman Joint Investment Fund (OIJIF), a JV between SBI and State General Reserve Fund (SGRF) of Oman, set up in July 2010 as SPV to invest in India commenced its operations in 2011 with initial seed capital of US$ 100 million, which has been fully deployed and the second tranche capital of around US$ 300 million agreed to.

On India-Oman Joint Ventures

The US$ 969 million, Oman India Fertilizer Company (Omifco) in Sur (Oman) is the largest Indian JV abroad which started operation in January, 2006 with a long term buy-back agreement under which India imports the entire production of 1.6 MTs of granulated urea and 0.255 MTs of ammonia. Iffco and Kribhco are equal partners in the venture with Oman Oil Company (OOC). An agreement regarding revised price for supply of gas was signed during July 2012.

 Bharat Oman Refineries Limited (BORL), a company promoted by Bharat Petroleum Corporation Limited (BPCL) and Oman Oil Company (OOC), has set up a 6 MMTPA grassroots refinery at Bina in Madhya Pradesh along with crude supply system. BORL, a US$ 2.4 billion project, was inaugurated in May 2011. 

Jindal Steel & Power Ltd.(JSPL) acquired the Oman-based Shadeed Iron & Steel Co LLC for US$ 464 million from Abu Dhabi’s Al Gaith Holding PJSC and is at present operating 1.5 MTPA gas based hot briquetted iron plant at Sohar Industrial port. Jindal Shadeed Iron & Steel (JSIS) recently expanded by setting-up new unit of Electric Arc Furnace and the Ladle Refining Furnace. JSPL signed a term loan agreement worth US$ 725 mn with Bank Muscat for financing JSIS’s new integrated unit. 

L&T have four mega joint ventures: L&T Oman LLC, L&T Electromech LLC, L&T Modular Fabrication Yard LLC and L&T Heavy Engineering LLC with the Zubair Group in Oman.

Trade Promotional events

Apart from B2B meetings for visiting Indian trade delegations to Oman, Mission organised an interactive business session for prominent Omani businessmen and NRIs/PIOs in September 2014 on the occasion of the Prime Minister’s ‘Make in India’ campaign. Mission also organized ‘India Business Seminar’ in November 2014 under the framework of market expansion activities attracting Omani investments to India. The Mission in association with India Tourism, Dubai organized a ‘Know India Seminar’ in October 2014, promoting the Indian Ministry of Tourism’s latest campaign ‘Find what you seek’ and ‘India-a 365 days destination’ program and the familiarization seminar on ‘Tourist Visa on Arrival enabled through Electronic Travel Authorization (TVoA-ETA) facility for Omani nationals in December 2014.

ITEC program

Under the ITEC program, the number of slots allotted for Oman has gone up by 200 per cent from 50 in 2011-12 to 85 in 2012-13, 125 in 2013-14 and 150 in 2014-15.

Air Links

Currently, Air India, Air India Express, Indigo, Spice Jet and Jet Airways along with Oman Air are operating flights between India and Oman. There are a total of around 400 direct flights per week between Oman (Muscat and Salalah) and a dozen destinations in India.