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India and Oman on Thursday signed a Comprehensive Economic Partnership Agreement (Cepa), giving India zero-duty access to 98.08 per cent of tariff lines, covering 99.38 per cent of shipment.
India has offered liberalisation on 77.79 per cent of its tariff lines, covering 94.81 per cent of the country’s imports from Oman by value. This is India’s first trade deal with a Gulf nation after the agreement with the United Arab Emirates in February 2022.
The pact, which comes after two years of talks, was signed in Muscat by Commerce and Industry Minister Piyush Goyal and his Oman counterpart Qais Mohammed Al Yousef in the presence of Prime Minister Narendra Modi and Sultan Haitham bin Tarik. “Today, we are taking a historic step forward in India-Oman relations, whose positive impact will be felt for decades to come,” Modi said on X.
“The Comprehensive Economic Partnership Agreement will energise our ties in the 21st century. It will give new momentum to trade, investment and open new opportunities across different sectors. The youth of both nations will greatly benefit,” the PM said.
Goyal said the deal expanded Oman’s commitment on services in key high-growth sectors, and it ensured greater mobility for Indian professionals.
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Officials said the deal would come into effect in three months, with the completion of Customs and the procedural-related formalities in the two countries.
Under the deal, India’s exports worth $3.64 billion, currently facing an import duty of 5 per cent in Oman, will move to zero per cent, according to calculations by the Department of Commerce.
The pact is set to benefit all major labour-intensive sectors that receive full tariff elimination. They include sectors such as gems and jewellery, textiles, leather, footwear, plastics, furniture, agricultural products, engineering products, pharmaceuticals, medical devices, and automobiles.
During FY25, India exported goods worth $4.1 billion to the West Asian nation and imported stuff worth $6.6 billion, leading to a trade deficit of $2.5 billion.
India has offered liberalisation based on only tariff-rate quotas (TRQ) for sensitive products imported from Oman. Under that, only a fixed quantity of imports is allowed at a lower (or zero) tariff while a much higher tariff applies once that quota is exhausted.
For instance, a cap has been imposed on food items such as dates. Similarly, in the case of polyethylene and polypropylene intermediates used to manufacture plastics; medical devices; electronics; and automobile components, India has agreed on TRQs, along with phased tariff reduction.
“To safeguard its interest, sensitive products have been kept in the exclusion category by India without offering any concessions. This includes items like agricultural products including dairy, tea, coffee, rubber, tobacco products; gold and silver bullion; jewellery; other labour-intensive products such as footwear, sports goods; and scrap of many base metals,” the department said in a statement.
In the case of trade in services, Oman has undertaken a broad market-access commitment in 127 sub-sectors such as legal, accounting; taxation; architectural engineering; integrated engineering; urban planning and landscape architecture; medical, nursing and midwifery services; audio-visual services; and tourism and travel-related services.
India will also get expanded “entry and stay rights” for intra-corporate transferees, business visitors, and independent professionals.
The cap on intra-corporate transferees has been raised from 20 per cent to 50 per cent (of the total strength), which will enable companies to deploy a larger share of managerial, executive and specialist staffers, exceeding its commitments in trade deals with other countries.
The formal commencement of India-Oman free-trade negotiations started in November 2023.
Negotiations on the text of most of the chapters were concluded by January 2024, and the idea was to sign the agreement after the Lok Sabha elections in India in June last year. However, fresh demand from Oman for a revised offer and greater market access for items such as polyethylene and polypropylene and India’s reservations regarding Oman’s policy aiming to replace foreign workers by local ones delayed the finalisation of the deal by more than a year.
Oman is India’s 28th largest export partner but the third-largest export destination among the six countries of the Gulf Cooperation Council (GCC).
Ajay Srivastava, founder of the Global Trade Research Initiative, said the deal strengthened India’s economic and geopolitical presence at the mouth of the Gulf, deepened Indian firms’ role in Oman’s logistics and supply chains, and supported India’s wider strategy on energy, services and regional connectivity.
“The agreement is less a trade breakthrough and more a strategic consolidation, locking in market access, mobility, and influence in a critical maritime and energy corridor,” he added.
SC Ralhan, president, Federation of Indian Export Organisations, said Oman’s strategic location made it a vital gateway to the Gulf and Africa, and the deal would enable Indian exporters to integrate more effectively into regional value chains, diversify markets, and expand India’s export footprint.
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