Articles
India-Oman Comprehensive Economic Partnership Agreement and the Reshaping of Gulf Economic Ties
How the India–Oman CEPA deepens trade, boosts Indian exports and services, and reshapes India’s strategic and economic ties with the Gulf.
Image courtesy: Mostafameraji, CC BY-SA 4.0 via Wikimedia Commons
Introduction
India and Oman signed the Comprehensive Economic Partnership Agreement (CEPA) on December 18, 2025, in Muscat, Oman. This partnership marks a new phase in the economic engagement between the two countries. The agreement is an example of strengthening bilateral ties as trade between India and Oman has risen from $8.95 billion in FY24 to $10.61 billion in FY25. The investment ventures are also steadily expanding, as reflected in over 6,000 joint ventures between the two nations in Oman. Cumulatively, India’s investment in Oman stands at $675 million, while Omani FDI equity inflows into India between April 2000 and March 2025 amount to $610.08 million. The agreement is India’s second free trade pact in the past six months, following the deal with the United Kingdom (ET Online 2025c).
In November 2025, a bilateral brief issued by the Embassy of India in Muscat mentioned that Oman was India’s 29th-largest export market and 25th-largest source of imports in FY 2024-25, placing Oman as India’s 28th overall economic partner. India ranked as Oman’s fourth-largest trading source of non-oil imports and its third-largest destination for non-oil exports during the same period (Embassy of India, Muscat, Oman 2025). The CEPA has immense strategic importance for India, as Oman is located along the Strait of Hormuz, an important corridor for global energy flows. In addition to the liberalisation of trade, the trade agreement highlights a convergence of economic and geopolitical interests, thereby reinforcing Oman’s role as an important economic partner. Oman’s strategic location and, therefore, the connectivity make it an important gateway to the Gulf Cooperation Council (GCC), parts of Central Asia, and East Africa. The trade pact with Oman complements India’s CEPA with the United Arab Emirates (UAE), strengthening its broader Gulf and West Asia economic strategy, which includes regional connectivity initiatives such as the India-Middle East-Europe Corridor (IMEC) (Middle East Briefing 2025).
The Impact of Zero-Duty Access on 98% of the Exports
Oman has agreed to eliminate duties on 98.08% of its tariff lines, covering 99.38% of India’s exports by value. This agreement offers almost complete market access for Indian goods in Oman. Certain labour-intensive sectors that are set to benefit the most are textiles, leather and footwear, gems and jewellery, engineering goods, plastics, furniture, agricultural products, pharmaceuticals, medical devices, and automobiles. India has extended tariff liberalisation on 77.79% of its tariff lines. This accounts for 94.81% of imports from Oman by value. In the process of protecting domestic farmers and MSMEs, several sensitive items have been excluded from concessions, including dairy products, chocolates, gold and silver, jewellery, footwear, and sports goods. At present, more than 80% of Indian exports to Oman face an average tariff of about 5%, with duties running as high as 100% on items such as certain meats, alcohol, and tobacco. The CEPA is expected to ease these barriers and strengthen the competitiveness of Indian exporters (ET Online 2025c).
Market access and trade facilitation have improved for Indian industries with the signing of the CEPA with Oman, as it establishes a supportive framework for services, investment, technology partnerships, and the movement of professionals (Raghavan 2025). The agreement makes strong commitments across sectors such as computer-related services, business and professional services, audio-visual media, research and development, education and healthcare, as it includes a comprehensive package. This is expected to create new opportunities for Indian service providers, support employment, and strengthen commercial ties between the two nations. Oman currently imports services worth about $12.52 billion globally, with India accounting for 5.31% of that total. The CEPA also permits 100% foreign direct investment by Indian companies in important services sectors in Oman, providing significant scope for India’s service industry to expand in the region (Raghavan 2025).
The Oman Deal Accelerates Broader Regional Integration
This is Oman’s first bilateral trade agreement since its 2006 pact with the United States. For India, it marks the second agreement with a Gulf Cooperation Council (GCC) country, following the trade deal signed with the UAE in February 2022. A trade agreement with Oman also positions India to expand its access to the GCC region, Eastern Europe, Central Asia, and Africa. This agreement is both balanced and ambitious and is expected to enhance bilateral trade, strengthen supply chains, support job creation, and reinforce a long-term economic partnership, consistent with India’s goals of inclusive and sustainable growth.
The CEPA highlights an important momentum in India’s economic diplomacy in the Gulf. The agreement creates a broad framework to strengthen cooperation in trade, services, investment, and professional mobility between the two countries. While it is an economic pact, the CEPA has deeper strategic implications, as it strengthens India’s long-term interest in the Gulf region. The CEPA carries immense geostrategic weight along with economic benefits, as Oman’s geographical location at the opening of the Strait of Hormuz makes it a vital partner in India’s trade and energy security strategy. Strengthening economic ties with Oman, given its critical location, will help India in increasing its footprint in the crucial maritime corridor in a region where great power competition is increasingly integrated with energy geopolitics. The agreement complements India’s CEPA with the UAE, signed earlier in 2022, by adding Oman to its network of trade and strategic partnerships. A comprehensive India-Gulf trade framework would enhance India’s influence in regional economic decision-making and help pave the path for deeper multilateral engagement, including the ambitious possibility of a preferential trade agreement with the GCC as a whole (ET Online, 2025d).
Trade, Energy, and Maritime Cooperation in India-Oman Relations
The signing of the CEPA between India and Oman was also followed by the adoption of a Joint Vision Document on maritime cooperation, showcasing their intention to strengthen cooperation in not just trade but also in the strategic and maritime spheres (PIB 2025). It highlighted their shared commitment to regional maritime security, the blue economy, and the sustainable use of ocean resources. One of the main objectives of the CEPA is to reduce trade barriers and provide a stable framework to expand trade and investment. It also aims to support employment and encourage stronger private sector participation in both economies. This agreement comes at a time when India and Oman aim to bolster supply-chain resilience and strengthen investment ties in the Gulf. While India is advancing its economic ambitions and the goal of Viksit Bharat by 2047, Oman is aiming for economic diversification and sustainable development under its Vision 2040 (MEA 2025).
Energy cooperation was a key focus of the discussions, with both sides examining ways to expand collaboration in exploration and production activities in India and overseas, as well as cooperation in new and renewable energy. In this context, both sides highlighted proposals for joint investments, technology transfer and long-term cooperation aligned with their shared sustainable energy objectives.
The leaders also agreed to step up defence cooperation through joint exercises, training initiatives, and senior-level exchanges, while strengthening maritime domain awareness and information-sharing to counter maritime crime and piracy. Highlighting the maritime dimension of ties, the two sides adopted a Joint Vision Document on Maritime Cooperation that connects regional maritime security with blue economy goals and the sustainable use of ocean resources. The joint statement mentioned several agreements and outcomes from the visit, including the CEPA; memoranda of understanding on maritime heritage and museums, agriculture and allied sectors, and higher education; an MoU between the Oman Chamber of Commerce and Industry and the Confederation of Indian Industry; and an executive programme on millet cultivation and agri-food innovation.
The two sides also shared proposals to set up an AYUSH Chair at Oman’s National University of Science and Technology, an ICCR Chair of Indian Studies at Sohar University, and the planned maiden voyage of INSV Kaundinya to Oman as part of maritime heritage outreach. On connectivity, Oman conveyed its interest in holding discussions on air services traffic rights, including the number of destinations and code-sharing arrangements, which India took note of. India expressed appreciation to Oman for safeguarding the welfare of its roughly 675,000-strong community in the Sultanate, while Oman recognised the Indian diaspora’s contribution to the country’s development (ET Online 2025b).
Free Trade Agreements as a Way Forward in India’s Trade Strategy
The tariff policy of the United States (US) has pushed governments worldwide to reassess their exposure to sudden trade shocks. In New Delhi, the response has been to fast-track free trade agreements and secure market access beyond the United States. India has stepped up efforts to conclude several FTAs in the coming months to cushion the impact of steep import duties and broaden export destinations amid rising global trade uncertainty.
Talks with the European Union are at an advanced stage, even as India has now signed a trade agreement with Oman aimed at boosting bilateral commerce and expanding exports of engineering goods, textiles, pharmaceuticals, and agricultural products. The timing is strategic. Indian exporters are facing pressure from US import tariffs of up to 50% that took effect in August, affecting sectors such as textiles, auto components, metals, and other labour-intensive industries. While negotiations on an India-US trade deal continue, the tariffs have underlined the urgency of finding alternative markets, positioning FTAs as a key tool in India’s export diversification strategy.
Free trade agreements have emerged as a key pillar of India’s economic strategy, aimed at deeper integration into global supply chains, stronger export growth, and sustained job creation. By reducing tariffs and providing stable trade rules, policymakers see these pacts as a way to keep Indian firms competitive and open up new markets at a time of rising protectionism.
India currently has 15 FTAs covering 26 countries, along with six preferential trade agreements with another 26 nations, and is negotiating with more than 50 additional partners. Agreements with the UAE and Australia have boosted bilateral trade. In May 2025, India and the UK announced a long-pending FTA that will lower tariffs on products such as Scotch whisky and English gin entering India, as well as on Indian food and spices exported to Britain (ET Online 2025a). Recent deals have strengthened the case for quicker negotiations.
Dr Dhritishree Bordalai is a Senior Research Associate at the International Relations vertical at Centre for Public Policy Research (CPPR), Kochi, Kerala, India.
References
- Embassy of India, Muscat, Oman. 2025. India and Oman Bilateral Relations. Muscat: Embassy of India. November 2025. https://www.indemb-oman.gov.in/eoi.php?id=bilateral.
- Economic Times Online. 2025a. “India Arming Itself with FTAs to Blunt Trump’s Tariff Shocks.” The Economic Times, December 18, 2025. https://economictimes.indiatimes.com/news/economy/foreign-trade/india-arming-itself-with-ftas-to-blunt-trumps-tariff-shocks/articleshow/126054841.cms.
- Economic Times Online. 2025b.“India-Oman Joint Statement Outlines Roadmap for Deeper Cooperation across Trade, Energy, Maritime Security.” The Economic Times, December 18, 2025. https://economictimes.indiatimes.com/news/economy/foreign-trade/india-oman-joint-statement-outlines-roadmap-for-deeper-cooperation-across-trade-energy-maritime-security-and-people-to-people-ties/articleshow/126060494.cms.
- Economic Times Online. 2025c. “India-Oman Trade Agreement: Two Countries Sign FTA to Deepen Economic Engagement.” The Economic Times, December 18, 2025. https://economictimes.indiatimes.com/news/economy/foreign-trade/india-oman-trade-agreement-two-countries-sign-cepa-to-deepen-economic-engagement/articleshow/126056073.cms?from=mdr.
- Economic Times Online. 2025d. “Jordan, Ethiopia, Oman: How India Stitched a New Triangle of Influence.” The Economic Times, December 19, 2025. https://economictimes.indiatimes.com/news/economy/foreign-trade/jordan-ethiopia-oman-how-india-stitched-a-new-triangle-of-influence/articleshow/126074668.cms?from=mdr.
- Middle East Briefing. 2025. “India–Oman CEPA: Stronger Trade and Investment Ties.” Middle East Briefing, December 19, 2025. https://www.middleeastbriefing.com/news/india-oman-trade-agreement-cepa-bilateral-economic-engagement/.
- Ministry of External Affairs (MEA). 2025. India – Oman Joint Statement during the Visit of Prime Minister of India, Shri Narendra Modi to Oman (December 17-18, 2025). December 18, 2025.
- Press Information Bureau, Prime Minister’s Office. 2025. India – Oman Joint Statement during the Visit of Prime Minister of India, Shri Narendra Modi to Oman. December 18, 2025. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2206044®=6&lang=11.
- Raghavan, T.C.A. Sharad. 2025. “India Signs FTA with Oman, Receives Zero Duty Access on 99% of Its Exports.” The Hindu, December 18, 2025. https://www.thehindu.com/business/Economy/india-oman-free-trade-agreement/article70411281.ece.
- Reuters. 2025. “Oman and India Sign Comprehensive Economic Partnership Agreement – Oman’s State News Agency.” Reuters, December 18, 2025. https://www.reuters.com/world/india/oman-india-sign-comprehensive-economic-partnership-agreement-omans-state-news-2025-12-18/.
Dr Dhritishree Bordalai holds a PhD from the Centre for European Studies (CES), School of International Studies (SIS), Jawaharlal Nehru University (JNU), New Delhi. She has a Certificate in Public Policy and Management from the Indian Institute of Management, Kozhikode (IIM-K), and has been awarded the UGC-DAAD Short-Term Scholarship during her PhD at the Otto-Suhr-Institut für Politikwissenschaft (OSI), Freie Universität Berlin, Germany.
She has attended several national and international conferences on her area of research and presented a paper at the Young Researchers Conference in JNU. Her core areas of research are migration, security and refugee studies.
