India–Oman Free Trade Agreement: A Strategic Shield for Exports Amid Global Trade Uncertainty

India and Oman have entered a new phase of economic partnership with the signing of a Comprehensive Economic Partnership Agreement (CEPA), marking one of India’s most ambitious trade deals in the Gulf region. Finalised during high-level discussions in Muscat, the agreement reflects a shared intent to deepen commercial engagement at a time when global trade is increasingly shaped by tariff wars, protectionism, and supply-chain disruptions.

The CEPA is designed to expand cooperation across goods, services, investment, and professional mobility, positioning Oman as a key partner in India’s broader strategy to diversify export destinations and reduce exposure to volatile global markets.

Shipments worth $6.55 billion from Oman entered India during FY25 | PHOTO: X @PiyushGoyal | Business Standard

Near-Total Duty-Free Access for Indian Exports

A defining feature of the India–Oman CEPA is the scale of tariff liberalisation. Oman has agreed to grant zero-duty access on the vast majority of its tariff lines, effectively covering almost all Indian exports by value. This move is expected to significantly reduce costs for Indian exporters and improve price competitiveness across a wide range of sectors.

Indian industries such as textiles, leather, footwear, gems and jewellery, pharmaceuticals, engineering goods, automobiles, plastics, and agricultural products are set to benefit directly. For many of these sectors, existing duties were a major barrier to expansion in the Gulf market, and their removal could unlock new growth opportunities, particularly for small and medium enterprises.

Balanced Market Opening on the Indian Side

While India has committed to liberalising tariffs on a substantial share of Omani imports, the agreement reflects a calibrated approach. Sensitive sectors such as dairy, tea, coffee, footwear, and precious metals have been excluded to safeguard domestic producers, farmers, and MSMEs. This balance ensures that trade expansion does not come at the cost of domestic economic stability.

By carefully structuring concessions, India has sought to encourage imports that support industrial and energy needs while maintaining protection where livelihoods could be affected.

Expanding Trade Beyond Goods

The CEPA goes beyond conventional free trade agreements by placing strong emphasis on services and investment. Oman has opened access across a wide range of service sectors, including information technology, professional and business services, education, healthcare, research, and audio-visual industries. This is particularly significant for India, whose global trade strength lies increasingly in services rather than merchandise alone.

The agreement also improves conditions for Indian professionals working in Oman. Provisions related to mobility allow longer stays, higher quotas for intra-corporate transferees, and easier entry for contractual service providers. These changes are expected to benefit Indian engineers, consultants, IT professionals, healthcare workers, and project-based employees.

Boosting Investment and Regional Connectivity

Another important dimension of the agreement is investment facilitation. Indian companies will be allowed 100 percent ownership in several sectors in Oman, encouraging deeper capital flows and long-term business partnerships. Oman’s strategic geographic location near the Strait of Hormuz enhances its role as a gateway to markets in the Middle East, Africa, and Europe.

For Indian firms, Oman offers an opportunity not just as a destination market, but as a regional hub for logistics, energy trade, and manufacturing, strengthening India’s presence across critical global trade routes.

De-Risking Exports in a Volatile Global Environment

The timing of the CEPA is particularly significant. With rising geopolitical tensions, shifting trade alliances, and increasing tariff barriers in major economies, India has been actively pursuing trade agreements that reduce dependency on a limited set of markets. The India–Oman CEPA aligns with this strategy by providing Indian exporters with predictable, long-term access to a stable and strategically important partner.

By locking in preferential access through a legally binding framework, the agreement helps Indian businesses plan investments and exports with greater certainty, insulating them from sudden policy shifts elsewhere.

The MGMM Outlook

India’s Comprehensive Economic Partnership Agreement with Oman marks a strategically timed move to protect and expand Indian exports amid rising global trade uncertainty. With near-total duty-free access granted by Oman, the agreement significantly enhances India’s competitiveness across key sectors such as textiles, pharmaceuticals, engineering goods, automobiles, gems and jewellery, and agricultural products. At a time when protectionism and tariff conflicts are reshaping global supply chains, the pact offers Indian exporters a stable and predictable market in the Gulf, helping reduce over-dependence on traditional export destinations.

Beyond goods, the agreement strengthens India’s advantage in services, investment, and professional mobility. Greater access for Indian IT professionals, consultants, healthcare workers, and project-based employees, along with improved investment conditions and full ownership rights in several Omani sectors, positions Oman as both a destination market and a regional gateway. Its strategic location near major shipping routes enhances India’s trade outreach to West Asia, Africa, and Europe, reinforcing a long-term strategy focused on diversification, resilience, and sustained economic engagement rather than short-term trade gains.

(Sources: LiveMint, Financial Express, MoneyControl)