India–Oman Comprehensive Economic Partnership

India and Oman have signed a Comprehensive Economic Partnership Agreement (CEPA), marking a major milestone in India’s trade diplomacy in the Gulf region. This agreement represents Oman’s first bilateral trade agreement since 2006 and India’s second CEPA within the Gulf Cooperation Council (GCC), following the India–UAE CEPA signed in 2022.

During the visit, Prime Minister Narendra Modi was conferred with the Order of Oman by His Majesty Sultan Haitham bin Tarik, the Sultan and Prime Minister of Oman, in recognition of his exceptional contribution to strengthening India–Oman bilateral relations. The award, instituted in 1970 by Sultan Qaboos bin Said, is among Oman’s highest civilian honours.

Overview and Strategic Significance of India–Oman CEPA

The India–Oman CEPA significantly strengthens India’s economic and strategic footprint in the Gulf region. It provides near-universal duty-free access for Indian exports, ambitious services sector liberalisation, enhanced professional mobility, and new opportunities in investment, AYUSH, and MSME-led growth.

While the agreement improves trade facilitation and regional connectivity, challenges such as structural trade deficits, under-utilisation of services potential, and regional geopolitical risks remain, necessitating sustained policy focus and diversification.

Key Features of the India–Oman CEPA

Near-Universal Duty-Free Market Access

Under the agreement, Oman has granted zero-duty access on 98.08% of its tariff lines, covering 99.38% of India’s exports by value. Immediate tariff elimination on nearly 98% of lines ensures rapid and tangible benefits for Indian exporters, particularly in the Gulf market.

Boost to Labour-Intensive Sectors

The CEPA provides full tariff elimination for key labour-intensive sectors, including textiles, leather, footwear, gems and jewellery, engineering goods, plastics, furniture, agricultural products, pharmaceuticals, medical devices, and automobiles. This is expected to generate employment and strengthen MSMEs, artisans, and women-led enterprises.

Balanced Tariff Concessions by India

India has offered tariff liberalisation on 77.79% of its tariff lines, covering 94.81% of imports from Oman. Sensitive sectors are safeguarded through exclusion lists and Tariff Rate Quotas (TRQs), particularly in agriculture, bullion and jewellery, select labour-intensive goods, and base metal scrap, ensuring a calibrated and balanced trade framework.

Ambitious Services Liberalisation

Oman has committed to liberalisation across 127 services sub-sectors, including information technology, business and professional services, research and development, education, healthcare, and audio-visual services. These commitments are expected to unlock high-value opportunities and significantly expand India’s services exports.

Enhanced Mobility of Indian Professionals

For the first time, Oman has made wide-ranging Mode 4 commitments under the General Agreement on Trade in Services (GATS). These include increasing the Intra-Corporate Transferees quota from 20% to 50% and extending the stay of Contractual Service Suppliers from 90 days to two years, with further extensions possible. This will substantially ease professional mobility for Indian service providers.

100% Foreign Direct Investment in Services

The CEPA permits 100% Foreign Direct Investment (FDI) by Indian companies in major services sectors in Oman through commercial presence. This enables Indian firms to expand operations and establish a long-term footprint in the Gulf region.

Landmark Provision on Traditional Medicine

The agreement includes the world’s first comprehensive commitment on Traditional Medicine across all modes of supply. This provision opens new avenues for India’s AYUSH and wellness sectors and promotes medical value travel.

Trade Facilitation and Regulatory Cooperation

The CEPA addresses non-tariff barriers through measures such as fast-tracking pharmaceutical approvals, mutual acceptance of Good Manufacturing Practices (GMP) inspection documents, recognition of Halal certification, acceptance of India’s National Programme for Organic Production (NPOP) certification, and enhanced cooperation in standards and conformity assessment.

Oman: Country Profile

Oman, with Muscat as its capital, is a member of the Gulf Cooperation Council (GCC) and is regarded as the oldest independent state in the Arab world. It is bordered by Yemen, the United Arab Emirates, and Saudi Arabia, and has extensive maritime boundaries along the Arabian Sea and the Gulf of Oman.

Geographically, Oman features the Rub al-Khali (Empty Quarter) desert, the Hajar and Dhofar mountain ranges, and is rich in natural resources such as petroleum, natural gas, copper, limestone, and asbestos.

Significance of the India–Oman CEPA

Oman serves as a gateway to the GCC, Eastern Europe, Central Asia, and Africa. The CEPA strengthens India’s economic footprint in West Asia and complements India’s broader Free Trade Agreement (FTA) strategy. It enhances trade facilitation, supply chain resilience, and investment confidence, aligning with India’s vision of inclusive and sustainable growth.

Current State of India–Oman Relations

Strategic and Political Relations

India and Oman share warm and historic ties, elevated to a Strategic Partnership in 2008. Oman is India’s oldest strategic partner in the Gulf and a key interlocutor within the GCC, Arab League, and Indian Ocean Rim Association (IORA).

Defence and Maritime Cooperation

Oman is the first Gulf country to conduct tri-service military exercises with India, including Al Najah (Army), Eastern Bridge (Air Force), and Naseem Al Bahr (Navy). These exercises reflect strong cooperation in Indian Ocean maritime security.

Economic and Trade Relations

Bilateral trade crossed USD 10.6 billion in FY 2024–25. Oman was India’s 29th largest export destination, 25th largest import source, and 28th largest overall trading partner. India ranks as Oman’s 4th largest source of non-oil imports and 3rd largest market for non-oil exports.

Trade Profile

India’s exports to Oman include petroleum products, aluminium oxide, rice, machinery, aircraft, electronics, plastics, and steel. India imports crude oil, LNG, fertilisers, ammonia, chemicals, sulphur, and iron ore from Oman.

People-to-People and Cultural Links

With an Indian diaspora of approximately 6.7 lakh, centuries-old cultural interactions, and strong institutional frameworks, people-to-people ties remain a cornerstone of India–Oman relations.

Challenges Constraining India–Oman Relations

Despite strong ties, several challenges persist. India’s share in Oman’s USD 12.52 billion services import market is only 5.31%, indicating under-utilisation of India’s strengths in IT, education, healthcare, and professional services.

Bilateral trade remains energy- and mineral-dominated, resulting in a structural trade deficit for India. In FY 2024–25, India recorded a trade deficit of approximately USD 2.5 billion.

Additionally, regional geopolitical instability, maritime disruptions, and Oman’s workforce nationalisation policy (Omanisation) create periodic uncertainties for Indian professionals and businesses.

Measures to Strengthen India–Oman Relations

India must deepen services engagement by fully utilising CEPA commitments in IT, healthcare, education, and R&D. Trade diversification toward manufacturing, pharmaceuticals, medical devices, and agri-value chains is essential to reduce trade imbalances.

Encouraging Indian investment in Oman as a manufacturing and logistics hub for the Gulf and Africa—particularly in renewables, green hydrogen, and advanced manufacturing—will further strengthen ties.

India and Oman should also forge a strategic maritime and Blue Economy partnership, leveraging Oman’s geostrategic location to enhance maritime security, energy supply chains, sustainable fisheries, marine research, and climate resilience.

Conclusion

The India–Oman CEPA represents a balanced, ambitious, and future-oriented trade agreement that significantly strengthens India’s strategic presence in the Gulf region. By aligning trade, investment, services, and people-to-people cooperation, the agreement advances India’s broader objectives of inclusive growth, employment generation, and resilient global economic engagement.