India–Oman CEPA set to be signed as New Delhi steps up Gulf trade push
While Oman’s market size limits the potential for massive export growth, the deal is a strategic milestone.
New Delhi: As the India-Oman free trade agreement (FTA) is set to be signed on Thursday during Prime Minister Narendra Modi’s visit to Muscat, the deal is being positioned as a key pillar of India’s expanding economic and strategic engagement with the Gulf, even as its immediate trade upside remains measured by the size of Oman’s market.
The Comprehensive Economic Partnership Agreement (CEPA) will be the final stop of the Prime Minister’s three-nation tour, which included Jordan and Ethiopia. Negotiated since November 2023, the pact covers goods, services and investment and is expected to come into force in a few months, following domestic ratification.
The FTA will be signed in the presence of Modi and Oman’s head of state, along with senior officials from both sides, as per a commerce ministry official.
Modi arrived in Oman on Wednesday for a two-day visit and was received at the airport by Oman’s deputy prime minister for defence affairs, Sayyid Shihab bin Tariq Al Said.
The FTA with Oman will be the first trade agreement to be signed during the tenure of commerce secretary Rajesh Agarwal, while for the NDA government led by Modi, it will mark the sixth such pact.
India is also in the final leg of negotiations with the European Union and the US on separate trade arrangements.
The trade agreement with Mauritius was signed in February 2021, followed by UAE in February 2022, Australia in April 2022, EFTA in February 2024, and UK in July 2025.
“The India-Oman FTA may not deliver headline trade expansion given Oman’s market size, but it meaningfully strengthens India’s energy security, investment presence and regulatory access in the Gulf. Its real value lies in stabilizing supply chains and deepening strategic economic ties rather than chasing large export numbers," said Dattesh Parulekar, assistant professor of international relations at Goa University.
Expanding trade footprint
According to a report released by the Global Trade Research Initiative (GTRI), the agreement broadly follows the template India used in its trade pact with UAE, signalling New Delhi’s preferred framework for economic engagement with Gulf economies. “The India–Oman CEPA is less about dramatic trade expansion and more about anchoring India’s long-term economic and strategic presence in the Gulf," said Ajay Srivastava, GTRI founder. “It reinforces supply chains, reduces regulatory friction and deepens investment ties with a partner that plays a critical role in India’s energy security."
Bilateral trade between India and Oman stood at about $10.5 billion in 2024–25. India’s exports to Oman were valued at $4.1 billion, led by petroleum products such as naphtha and petrol, along with machinery, aircraft, rice, iron and steel articles, beauty and personal care products and ceramics.
While more than 80% of Indian goods already enter Oman at an average tariff of around 5%, duties can reach as high as 100% on select products. Tariff elimination under the CEPA is expected to improve price competitiveness for Indian exporters.
However, GTRI cautions that the scope for large export gains is limited. “With a population of around five million and a GDP of roughly $115 billion, Oman cannot absorb exports at the scale of larger Gulf markets," Srivastava said. “Sustained gains for Indian exporters will depend on moving up the value chain rather than relying purely on tariff cuts."
For Oman, the agreement consolidates its role as a key supplier of energy and industrial inputs to India. India imported $6.6 billion worth of goods from Oman in FY25, dominated by crude oil, liquefied natural gas, and fertilisers, alongside chemicals such as methanol and anhydrous ammonia, which are critical for the Indian agriculture, chemical, cement, and power sectors.
Regulatory, investment gains
Most of these products already attract low duties, suggesting the CEPA will reinforce existing trade flows rather than radically alter them.
Beyond tariffs, India is also seeking regulatory gains, particularly in the pharmaceutical sector. According to the GTRI assessment, the CEPA may include provisions to streamline approvals for Indian drugs that are already cleared by regulators such as the US Food and Drug Administration, the UK’s Medicines and Healthcare products Regulatory Agency (MHRA), and the European Medicines Agency. “Regulatory fast-tracking, especially for pharmaceuticals, could deliver more tangible benefits than headline tariff reductions," Srivastava noted.
The strategic dimension of the pact looms larger than its trade numbers. Indian investments in Oman exceed $7.5 billion, with more than 6,000 India–Oman joint ventures, many of them concentrated in the Sohar and Salalah free zones. “The CEPA strengthens India’s investment footprint and geopolitical positioning in the Gulf," Srivastava said. “In that sense, its real value lies beyond trade statistics."
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