India-Oman FTA: 99% Indian exports get duty-free access, maritime security boost — why trade deal with Sultanate matters

India and Oman signed a free trade agreement on Thursday, which will grant duty-free access to 98% of Indian exports to the Sultanate, including textiles, agricultural products, and leather goods.

In return, India will reduce tariffs on Omani products such as dates, marble, and petrochemicals.

The agreement is expected to take effect in the first quarter of next year. The deal assumes significance as India faces steep 50% tariffs in its largest export market, the US.

The pact was signed in Muscat by Commerce and Industry Minister Piyush Goyal and Oman's Minister of Commerce, Industry and Investment Promotion Qais bin Mohammed Al Yousef, in the presence of Prime Minister Narendra Modi. Oman has offered zero-duty access on over 98% of its tariff lines, covering 99.38% of India’s exports to the country.

The bilateral relations between the two nations have been going strong. Prime Minister Narendra Modi visited Oman in February 2018, and Sultan Haitham bin Tarik made a State visit to India in December 2023, giving new momentum to the ties.

Why Oman matters?

Oman is a key partner in India’s West Asia policy and plays a significant role in backing New Delhi's interests in regional and multilateral forums, including the Gulf Cooperation Council (GCC), the Arab League, and the Indian Ocean Rim Association (IORA).

The two nations share strong geographical, historical, and cultural ties, with people-to-people connections dating back nearly 5,000 years.

Political ties between India and Oman have grown increasingly strategic over the years, reinforced by regular high-level exchanges.

Before Prime Minister Modi, four Indian Prime Ministers—Rajiv Gandhi, PV Narasimha Rao, Atal Bihari Vajpayee, and Manmohan Singh—had visited Oman, establishing a strong tradition of high-level bilateral engagement.

Nearly seven lakh Indian nationals reside in Oman. India receives about USD 2 billion in remittances from Oman annually.

Indian enterprises have built a strong presence in Oman, with over 6,000 Indian establishments operating across sectors. India has received USD 615.54 million in foreign direct investment from Oman between April 2000 and September 2025.

This is the second trade pact signed by India in the last six months, following the one with the UK, and is part of a strategy to sign trade agreements with developed economies that are not competing with India's labour-intensive interests and provide opportunities for Indian businesses.

Defence cooperation

Defence cooperation has become a cornerstone of the India-Oman strategic partnership, with Oman standing as India’s closest defence ally in the Gulf. It is the first Gulf country with which India conducts joint exercises across all three services—Army, Navy, and Air Force.

The two nations also collaborate closely on maritime security in the Indian Ocean and maintain regular defence dialogues through platforms like the Joint Military Cooperation Committee (JMCC).

Second trade deal with a GCC member

This is also the second trade deal India has inked with a GCC country. India, in May 2022, implemented a similar pact with the UAE, and it is expected to soon start talks with Qatar. The other members of the council are Bahrain, Kuwait, and Saudi Arabia.

Talks for the free trade agreement, officially termed as CEPA (Comprehensive Economic Partnership Agreement), formally began in November 2023 and the negotiations concluded this year.

In free trade agreements, the two partners typically reduce or eliminate customs duties on as many goods as possible and relax regulations to boost trade in services and attract investments.

The India-Oman FTA is the Sultanate's first bilateral trade agreement since the US pact in 2006. Among GCC countries, Oman ranks as India’s third-largest export destination. Bilateral trade between the two nations reached approximately USD 10.5 billion in 2024-25, with exports at USD 4 billion and imports at USD 6.54 billion.

(With inputs from agencies)