India-Oman trade deal signed as New Delhi seeks to de-risk exports amid tariff war

New Delhi: India on Thursday signed a comprehensive economic partnership agreement (CEPA) with Oman that seeks to strengthen the country’s economic and strategic engagement with the Gulf and deepen its footprint in the region.

The pact—India’s second deep trade agreement with a Gulf nation after the UAE—aims to lock in market access, services mobility and investment footholds beyond transactional trade. For Oman, the agreement is only its second bilateral trade deal after the US in 2006.

The CEPA was signed by Union commerce and industry minister Piyush Goyal and his counterpart Qais Al Yousef, during Prime Minister Narendra Modi's two-day visit to Muscat that began on Wednesday.

Speaking at the India-Oman Business Summit, Goyal pointed to the $10 billion bilateral trade between India and Oman, and said that the CEPA will act as an enabler of a more ambitious future by offering duty-free access, addressing trade barriers, and simplifying rules.

“It unlocks near-universal duty-free access for Indian goods, expands services opportunities and ensures greater mobility for Indian professionals, while safeguarding India’s sensitive sectors,” he said.

According to a government official who spoke on the condition of anonymity, the CEPA with Oman will take effect in a few months once procedural formalities are completed, as was the case with the India-UAE CEPA, which was signed in February 2022 and implemented in May that year.

The deal’s details

Under the agreement, Oman has offered zero-duty access on 98.08% of its tariff lines, covering 99.38% of India’s exports by value, with immediate tariff elimination on 97.96% of tariff lines. Oman’s import duties currently range from zero to 100%, with steeper tariffs on select items such as meats, wines, and tobacco.

In return, India has offered tariff liberalization on 77.79% of its tariff lines, covering 94.81% of imports from Oman by value, while keeping out sensitive sectors such as dairy, tea, coffee, rubber, tobacco, bullion, jewellery, footwear and sports goods. For sensitive products of interest to Oman, India’s concessions are largely through tariff-rate quotas.

Labour-intensive sectors such as textiles, leather, footwear, gems and jewellery, engineering goods, plastics, furniture, agricultural products, pharmaceuticals, medical devices and automobiles will receive full tariff elimination.

Petroleum products, the largest export item to Oman at $1.43 billion, are already largely duty-free. However, key sectors such as engineering goods ($812.2 million), chemicals ($241.4 million), and partially duty-bearing mineral products, including mica, coal and other ores ($428.6 million), are expected to benefit directly from tariff reductions.

A key new feature of the CEPA is Oman’s first and most ambitious services commitments, with market access offered across 127 sub-sectors, including computer-related services, business and professional services, audio-visual services, research and development, education and health.

Oman’s global services imports of $12.5 billion present significant untapped opportunities for Indian service providers, the commerce ministry said in a statement.

The agreement also delivers significant mobility commitments for Indian professionals, with wide-ranging Mode 4 commitments, including higher quotas for intra-corporate transferees, extended stay periods of up to two years (with further extension) for contractual service suppliers, and liberalized entry for professionals in accountancy, taxation, architecture, medical and allied sectors.

Oman has also committed to allowing 100% foreign direct investment (FDI) by Indian companies in major services sectors.

In a first-of-its-kind provision globally, Oman has made comprehensive commitments on traditional medicine across all modes of supply, opening new opportunities for India’s AYUSH and wellness sectors and promoting medical value travel.

The CEPA also provides for fast-tracking marketing authorizations for pharmaceutical products approved by regulators such as US Food and Drug Administration, European Medicines Agency, and the UK's Medicines and Healthcare products Regulatory Agency, and the acceptance of good manufacturing practice inspection documents, reducing time and cost for Indian pharma exporters.

The CEPA facilitates mutual recognition arrangements for Halal certification, acceptance of India’s National Programme for Organic Production (NPOP) certification for organic products, and enhanced cooperation on standards and conformity assessment, addressing long-standing non-tariff barriers.

Exporters said the agreement could help lower trade costs and open up new duty-free market opportunities for India’s micro, small and medium enterprises (MSMEs) and farm producers.

“This India-Oman CEPA has the potential to transform India’s MSME clusters and farm producers into globally competitive, duty-free suppliers to Oman and the wider Gulf-Africa region,” said Ajay Sahai, director general, Federation of Indian Export Organisations (FIEO). “By reducing trade costs and expanding market access, it can convert local production strengths into global business opportunities,”

Apart from providing a slew of tariff benefits and broader market access, the two countries said in a joint statement that they will explore new investment opportunities in infrastructure, manufacturing, logistics, technology, food security and hospitality, supported by the Oman–India Joint Investment Fund.

Both countries agreed to expand energy cooperation beyond traditional oil and gas to include green hydrogen, green ammonia and renewable energy, along with joint investments and technology partnerships. Defence and maritime security cooperation was reinforced through plans to step up joint exercises, training, information-sharing and initiatives to counter maritime crime and piracy, alongside the adoption of a Joint Vision Document on Maritime Cooperation.

The leaders also reviewed progress in digital infrastructure, IT services and space applications, welcomed deeper cooperation in agriculture, education, health and traditional medicine, and reaffirmed cultural and people-to-people ties as a cornerstone of the bilateral relationship.

Strategic gains

Oman is India’s third-largest export destination among Gulf Cooperation Council (GCC) countries. Data from the commerce ministry showed that bilateral trade between the two nations stood at $10.6 billion in 2024-25, with India’s exports at $4.0 billion and imports at $6.5 billion.

Experts said the deal is significant despite the small size of bilateral trade between India and Oman, as it provides India with strategic value beyond tariffs, and underlines the country’s broader Gulf strategy, linking trade diversification, energy security and regional influence at a time when India is seeking to de-risk exports amid rising global tariff tensions.

Ajay Srivastava, co-founder, Global Trade Research Initiative (GTRI), said the CEPA strengthens India’s economic and geopolitical presence at the mouth of the Gulf, deepens the role of Indian firms in Omani logistics and supply chains, and supports India’s wider strategy on energy, services and regional connectivity.

“The agreement is therefore less a trade breakthrough and more a strategic consolidation, locking in market access, mobility and influence in a critical maritime and energy corridor,” Srivastava said.

To be sure, Indian companies have over 6,000 joint ventures and investments exceeding $7.5 billion, largely concentrated in logistics and industrial hubs.

Other experts agreed with Srivastava’s assessment. “India is an influential player in the region, and after the India–Oman CEPA, there is a strong possibility that Saudi Arabia may feel pressure to recalibrate its strategic alignments, especially in relation to Pakistan,” said Amit Singh, associate professor at the Special Centre for National Security Studies in Jawaharlal Nehru University. “The partnership also enhances India’s ability to use Oman as a stable economic and logistical bridge to markets in the Gulf, Africa and Europe.”

Industry captains, too, welcomed the trade agreement with Oman. Chandrajit Banerjee, director-general of industry body CII said the CEPA will enable greater participation of Indian companies not only in Oman and the wider Gulf region but also strengthen economic linkages across the Gulf–Africa corridor.

“Post implementation of the CEPA, we anticipate overall bilateral trade to increase to $15 billion in the next 3–5 years and deeper integration of supply chains,” he said, adding that sectors likely to benefit would include petrochemicals, engineering, textiles, agriculture & food processing, green energy and green hydrogen, and technology.

Ranjeet Mehta, CEO and secretary general, PHDCCI, said the CEPA will lower trade costs, improve supply-chain certainty and expand market access in the Gulf and Africa via Oman. Apart from pointing to several sectors that will benefit from the deal, Mehta said Indian services firms will gain from Oman’s commitments in IT, healthcare, education and enhanced mobility for skilled professionals.

“Zero duty access on 2,123 engineering tariff lines is expected to boost the competitiveness of Indian engineering goods and help exporters expand in Oman,” said Pankaj Chadha, chairman, Engineering Export Promotion Council (EEPC). “This measure is set to help exporters in industrial machinery, electrical equipment, auto parts, metals, and other engineering products.”

Chadha added that India’s engineering exports to Oman are projected to potentially reach about $1.3-1.6 billion by 2028.

“The FTA opens opportunities for polished diamonds and gold jewellery, while creating new avenues in silver, platinum and imitation jewellery,” said Kirit Bhansali, chairman of the Gems & Jewellery Export Promotion Council (GJEPC). “We see the potential to grow exports from $35 million in 2024 to around $150 million over the next three years, supported by improved competitiveness and deeper industry collaboration.”

Sixth trade deal for NDA

For the National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi, the Oman CEPA marks the sixth such pact since 2014 when it first came to power.

The trade agreement with Mauritius was signed in February 2021, followed by the UAE in February 2022, Australia in April 2022, European Free Trade Association in February 2024, and the UK in July 2025.

India is also in the final leg of negotiations with the European Union (EU) and the US on separate trade arrangements. New Delhi is expected to begin trade talks with another GCC member, Qatar, in the near future.

Talks for the India-Oman CEPA began in November 2023, with five rounds of in-person negotiations held, the last in New Delhi in January. Negotiations concluded around August.