During Prime Minister Narendra Modi's two-day visit to Muscat, the Comprehensive Economic Partnership Agreement (CEPA), which addresses investment, commodities, and services, was signed.
Following a similar arrangement with the United Arab Emirates, India inked a free-trade agreement (FTA) with Oman on Thursday, adding another pillar to New Delhi's growing trade and geopolitical engagement with the Gulf.
During Prime Minister Narendra Modi's two-day visit to Muscat, which started on Wednesday, Union commerce and industry minister Piyush Goyal and his counterpart Qais Al Yousef signed the Comprehensive Economic Partnership Agreement (CEPA), which covers investment, goods, and services, at Sultan Haitham bin Tariq's palace.
The agreement intends to increase India's long-term economic footprint in West Asia while lowering tariff and regulatory hurdles. On December 12, the Union cabinet in India accepted the CEPA, and the draft agreement was also approved by the lower house of parliament in Oman.
Speaking to business executives at the India-Oman Business Summit, Modi stated that although the seasons may vary, India and Oman's bond will only get stronger over time.
He highlighted the partnership's 70 years of diplomatic ties, saying it is based on shared heritage and trust and is now looking forward to a more prosperous future.
"We have more over $10 billion in bilateral trade, but we are only getting started. There are still a lot of accomplishments and a long path ahead. Speaking during the meeting, Goyal stated, "Our focus must now shift to building a more resilient and diversified economic partnership—across trade, investment, tourism, and cooperation in innovation and technology."
He continued by saying that by providing duty-free access, removing trade barriers, and streamlining regulations, the CEPA—the first bilateral trade agreement Oman has signed since its 2006 agreement with the US and only the second free trade agreement India has signed in the last six months, after the UK—will facilitate a more ambitious future.
"It ensures greater mobility for Indian professionals, expands service opportunities, and unlocks nearly universal duty-free access for Indian goods, while safeguarding India's sensitive sectors," he stated.
Similar to the India-UAE CEPA, which was signed in February 2022 and put into effect in May of that same year, the India-Oman agreement is similarly anticipated to go into effect a few months after signing after all formalities are finished, according to a government official who spoke on condition of anonymity.
It is the first trade agreement inked under Commerce Secretary Rajesh Agarwal, and it will be the sixth for the Modi-led National Democratic Alliance (NDA) government.
The European Free Trade Association was signed in February 2024, the UK in July 2025, the UAE in February 2022, Australia in April 2022, and Mauritius in February 2021.
Additionally, India is in the last stages of discussions for separate trade agreements with the US and the European Union (EU). In the near future, New Delhi is anticipated to start trade negotiations with Qatar, another GCC member.
Trade agreement between India and Oman
In accordance with the agreement, 98.08% of Oman's tariff lines—which account for 99.38% of India's exports by value—have zero-duty access, and 97.96% of tariff lines have immediate tariff elimination. Among its Gulf allies, this offers India one of the biggest tariff savings.
At the moment, Oman's import taxes vary from 0% to 100%, with higher tariffs on some goods including tobacco, wines, and meats.
Full tariff elimination will greatly increase export competitiveness and job opportunities in labor-intensive industries like textiles, leather, footwear, gems and jewelry, engineering goods, plastics, furniture, agricultural products, pharmaceuticals, medical devices, and automobiles.
In exchange, India has provided tariff liberalization on 77.79% of its tariff lines, which covers 94.81% of Omani imports by value. However, the exclusion list still includes sensitive industries including dairy, tea, coffee, rubber, tobacco, bullion, jewelry, footwear, and sports goods. India mostly uses tariff-rate quotas to make concessions for sensitive goods that Oman is interested in.
Oman's first-ever and most ambitious service commitments, which enable market access in 127 sub-sectors, including computer-related services, business and professional services, audio-visual services, research and development, education, and health, are a significant new aspect of the CEPA. According to a statement from the trade ministry, Oman's $12.5 billion global service imports offer Indian service providers substantial unexplored prospects.
Additionally, the pact offers Indian professionals hitherto unheard-of mobility commitments. Higher quotas for intra-corporate transferees, longer stay periods of up to two years (with additional extensions) for contractual service providers, and liberalized entry for professionals in accounting, taxation, architecture, medicine, and related fields are just a few of the extensive Mode 4 commitments Oman is offering for the first time.
Additionally, Oman has pledged to permit 100% foreign direct investment (FDI) in significant service areas from Indian businesses.
Oman has made extensive pledges on traditional medicine across all channels of supply in a first for the world, creating new potential for India's AYUSH and wellness sectors and encouraging medical value travel.
In order to save time and money for Indian pharmaceutical exporters, the CEPA also expedites marketing authorizations for pharmaceutical products that have been approved by regulatory bodies like the US Food and Drug Administration, the European Medicines Agency, and the UK's Medicines and Healthcare Products Regulatory Agency. It also accepts good manufacturing practice inspection documents.
In order to remove long-standing non-tariff obstacles, the CEPA promotes mutual recognition agreements for Halal certification, acceptance of India's National Programme for Organic Production (NPOP) certification for organic products, and improved collaboration on standards and conformity assessment.
Additionally, after Oman's contributory system is put into place, both parties have committed to engage further talks on social security coordination.
Gains in strategy
Among the Gulf Cooperation Council (GCC) nations, Oman is India's third-largest export market. In 2024–2025, the two countries' bilateral trade totaled $10.6 billion, with $4.0 billion coming from India's exports and $6.5 billion from its imports.
Oman's comparatively small market size limits the immediate trade upside, but the pact gives India definite supply-side and strategic benefits. It is anticipated to strengthen regulatory collaboration, especially in the pharmaceutical industry, increase market access for Indian exports, and strengthen energy security by stabilizing supply of fertilizer, LNG, and crude oil.
The agreement also strengthens India's expanding investment presence in Oman, where Indian businesses have over 6,000 joint ventures and investments totaling more than $7.5 billion, mostly in industrial and logistical hubs.
Beyond trade, the CEPA highlights India's larger Gulf strategy, which links regional influence, energy security, and trade diversification at a time when India is trying to reduce export risk in the face of escalating tariff tensions worldwide.
Duties can approach 100% on certain products, even though over 80% of Indian commodities already enter Oman at an average rate of about 5%. It is anticipated that the CEPA's removal of tariffs will increase Indian exporters' ability to compete on pricing.
Under the arrangement, approximately $3 billion worth of Indian goods to Oman, including textiles and chemicals, might be free of tariffs.
Improved market access is also likely to benefit labor-intensive industries like textiles, which are now subject to high tariffs in the US. The highest item in the category was the $63.8 million worth of ready-made clothing that India shipped to Oman in 2024–2025.
At $1.43 billion, petroleum products are Oman's biggest export, and they are already mostly duty-free. Tariff reductions are anticipated to directly help important industries like engineering goods ($812.2 million), chemicals ($241.4 million), and partially duty-bearing mineral products like coal, mica, and other ores ($428.6 million).
According to exporters, the deal may help reduce trade costs and create new duty-free market prospects for Indian farm producers and micro, small, and medium-sized businesses (MSMEs).
"This India-Oman CEPA has the potential to turn India's farm producers and MSME clusters into duty-free, globally competitive suppliers to Oman and the larger Gulf-Africa area.
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