India-Oman bilateral trade is set to double to over $21bn by 2030, positioning the partnership as a pillar of regional economic leadership. CEPA signals a bold shift from routine trade to a future-ready, job-creating economic alliance. With near-universal duty-free access and deep integration across goods, services, and investment, it unlocks new growth engines.

India and Oman have taken a decisive step to strengthen bilateral ties by signing the Comprehensive Economic Partnership Agreement (CEPA), marking a watershed moment in their economic relations. Far more than a conventional Free Trade Agreement, CEPA establishes a forward-looking framework to deepen trade, strengthen investment flows, and unlock significant employment potential in labour-intensive sectors. Anchored in near-universal market access and long-term strategic cooperation, the agreement is set to transform the trajectory of bilateral trade to the next level. Overall, the pact reflects India and Oman’s shared commitment to building a resilient, growth-oriented, and future-ready economic partnership.

India and Oman share deep historical and civilisational links that have naturally translated into strong contemporary economic engagement. Over the years, Oman has emerged as India’s third-largest trading partner within the Gulf Cooperation Council (GCC), underscoring its growing relevance in India’s West Asia strategy. Bilateral trade between the two countries has reached $10.6bn, with Indian exports valued at $4.0bn and imports at $6.5bn, reflecting both strong energy linkages and expanding non-oil trade. The CEPA builds on this foundation and provides an institutional mechanism to elevate the partnership to a higher and more diversified growth path.

Bilateral Trade (USD Billion)

 Source: Ministry of Commerce, Government of India 

India–Oman relations have evolved beyond traditional trade and energy to encompass investments, renewable energy, technology collaboration, and maritime security, supported by regular high-level political engagement. As Oman advances Vision 2040 to diversify its economy away from hydrocarbons, India stands out as a natural partner given its strengths in technology, manufacturing, green energy, digital services, and infrastructure. In this context, the India–Oman CEPA has significant transformative potential for both the economies.

A Landmark Agreement After Two Decades

India,Oman bilateral relation concept background

The India–Oman CEPA is particularly significant for Oman, as it marks the country’s first free trade agreement in more than twenty years, following its last such pact with the United States in 2006. Negotiations for the CEPA were launched in November 2023 and concluded after five intensive rounds, with the final round held in January 2025. The agreement was formally signed by India’s Commerce and Industry Minister Piyush Goyal and Oman’s Minister of Commerce, Industry and Investment Promotion Qais Al Yousef, in the presence of Prime Minister Narendra Modi.

Near-Universal Market Access and Trade Liberalisation

At the core of the CEPA is unprecedented market access for Indian exporters. Under the agreement, India secures duty-free access for 98% of its products in the Omani market. This is a significant breakthrough, given that Oman’s import duties currently range from 0 per cent to 100 per cent, with very high tariffs on select products, including specific meats, wines, and tobacco. The sweeping tariff liberalisation under the CEPA significantly enhances India’s price competitiveness and reduces trade barriers that have historically constrained export expansion. This level of access not only boosts export volumes but also provides Indian producers with greater predictability and stability, encouraging long-term investment in export-oriented manufacturing.

Labour-Intensive Sectors at the Heart of the CEPA

A defining feature of the India–Oman CEPA is its strong orientation towards labour-intensive sectors, which are central to employment generation in India. The agreement is expected to deliver the most significant gains to industries such as textiles, footwear, gems and jewellery, automobiles and auto components, agro-chemicals, and renewable energy equipment. These sectors are characterised by high employment intensity, deep SME participation, and strong linkages with domestic value chains.

With near-zero tariffs in Oman, Indian manufacturers in these sectors are likely to see a surge in demand, enabling them to scale up production, improve capacity utilisation, and create new jobs. The CEPA thus aligns closely with India’s broader objectives of strengthening export growth, industrial expansion, and employment creation.

Diversifying India’s Export Basket to Oman

India’s current export profile to Oman reflects growing diversification beyond traditional commodities. Key exports include light oils and preparations, aluminium oxide, rice, machinery and mechanical appliances, electrical machinery and equipment, plastics, iron and steel, ceramics, and beauty and make-up preparations. The CEPA is expected to further expand this basket by encouraging value-added, technology-enabled exports and reducing over-dependence on a narrow range of products. By lowering trade costs and improving market certainty, the agreement incentivises Indian firms to explore new product lines and deepen their presence in Oman’s domestic market and re-export channels.

Energy Security and a More Balanced Trade Structure

On the import side, India’s trade with Oman is dominated by crude petroleum and liquefied natural gas (LNG), which together account for a substantial share of imports. Other vital imports include urea, organic chemicals, and sulphur, all of which are critical inputs for India’s agriculture and industrial sectors. While energy imports have resulted in a trade deficit for India, the CEPA offers an opportunity to rebalance trade by accelerating non-oil exports and investment-driven cooperation. Over time, increased exports of labour-intensive and manufactured goods could help moderate the trade imbalance and make bilateral trade flows more resilient to global energy price volatility.

Oman as a Strategic Gateway for Indian Businesses

One of the most compelling strategic dimensions of the CEPA is Oman’s positioning as a gateway economy. Oman offers Indian businesses a stable, competitive base for access not only to the Gulf region but also to Eastern Europe, Central Asia, and Africa. Its advanced ports, world-class logistics infrastructure, free and special economic zones, and investor-friendly policies significantly enhance its attractiveness as a regional hub. For Indian exporters and investors, particularly in labour-intensive manufacturing, Oman offers a platform to integrate into broader regional and global value chains, thereby extending the benefits of the CEPA far beyond bilateral trade alone.

Services, Investment, and Knowledge-Based Cooperation

The CEPA goes beyond goods trade to promote deeper engagement in services, investment, research and development, tourism, and education. India is expected to gain meaningful access to services, complementing its strengths in IT, professional services, healthcare, and education. Enhanced services trade will not only generate export earnings but also support skill mobility and knowledge exchange between the two economies. Investment flows are also expected to strengthen, with Oman positioning itself as a stable, neutral partner of choice. At the same time, India offers a large market, strong growth prospects, and expanding industrial ecosystems.

Energy Transition and Future-Ready Collaboration

Another critical pillar of the CEPA is cooperation in energy transition and sustainability. Both India and Oman have committed to working together in renewable energy, battery storage, green hydrogen, and green ammonia. This collaboration supports global climate objectives while opening new avenues for industrial development, technology transfer, and green-sector employment.

Catalyst for Wider India–GCC Engagement

Strategically, the India–Oman CEPA could catalyse renewed momentum in India–GCC free trade negotiations. With India already having an FTA with the United Arab Emirates and ongoing engagement with Qatar, the Oman agreement strengthens India’s economic footprint in the Gulf and signals readiness for deeper regional integration.

A Structural Shift in Bilateral Trade

In conclusion, the signed India–Oman labour-intensive CEPA marks a decisive shift from transactional trade to a strategic, employment-oriented, and future-ready economic partnership. By granting 98.08 per cent duty-free market access, covering 99.4 per cent of India’s exports by value, and liberalising 77–78 per cent of tariff lines, the agreement prioritises labour-intensive sectors. It strengthens cooperation across goods, services, investment, logistics, and energy. With bilateral trade already at about $10.6bn, a boost to India’s labour-intensive exports to Oman, expanded access to a services market valued at more than $12bn, and Oman’s gateway role to the GCC and East Africa, India–Oman trade has the potential to double to around $21bn by 2030, embedding the partnership in a long-term vision of shared growth, resilience, and regional economic leadership.