India-Oman trade deal: How the CEPA will anchor India’s expanding Gulf strategy; strengthen strategic and investment footprint

India and Oman are set to sign a Comprehensive Economic Partnership Agreement (CEPA) on December 18, a move that will deepen economic ties and anchor India’s expanding trade and strategic footprint in the Gulf, according to a report by the Global Trade Research Initiative (GTRI).



The agreement, to be inked in Muscat during Prime Minister Narendra Modi’s three-nation tour, will cover goods, services and investment and is expected to be implemented after a few months. Negotiations began in November 2023 and the structure broadly follows India’s free-trade pact template with the United Arab Emirates, the GTRI report said.





The CEPA aims to reduce or eliminate tariffs across a wide range of products, liberalise services trade and facilitate investment. Bilateral trade between India and Oman stood at about $10.5 billion in 2024–25, with India exporting $4.1 billion worth of goods and importing $6.6 billion, largely energy and fertiliser inputs.



“For India, the agreement strengthens its economic and strategic presence in the Gulf, even as the trade gains are more incremental than transformative,” GTRI founder Ajay Srivastava noted, pointing to Oman’s small market size but significant geopolitical and energy importance.



India’s export basket to Oman is led by naphtha ($747.6 million) and petrol ($561 million), along with calcined alumina, machinery, aircraft, rice, iron and steel articles, personal care products and ceramics. While more than 80% of Indian goods already enter Oman at an average tariff of around 5%, duties on some items range up to 100%. Tariff elimination under the CEPA is expected to improve competitiveness for Indian industrial exports, though sustained growth will depend on product quality and differentiation, the report noted.



Oman, in turn, stands to gain from improved access to the Indian market for energy and industrial inputs. India’s imports from Oman in FY2025 were dominated by crude oil, liquefied natural gas and fertilisers, each valued at about $1.1 billion. Chemical inputs such as methyl alcohol and anhydrous ammonia, along with petroleum coke, are critical for India’s agriculture, chemicals, cement and power sectors. Many of these products already face low duties under India’s other trade agreements, suggesting the CEPA will reinforce existing supply chains rather than radically alter trade flows.



Beyond tariffs, the agreement covers a wide negotiating agenda, including intellectual property, government procurement, digital trade, rules of origin, customs cooperation, sanitary and phytosanitary measures, technical barriers to trade, dispute settlement and support for small and medium-sized enterprises. These provisions are aimed at easing non-tariff barriers and improving predictability for businesses on both sides.



India is also expected to seek streamlined approval pathways for pharmaceutical products already cleared by regulators such as the US Food and Drug Administration, the UK’s Medicines and Healthcare products Regulatory Agency and the European Medicines Agency, mirroring provisions in its UAE agreement.



Despite the limitations posed by Oman’s population of about five million and GDP of roughly $115 billion, the CEPA carries strategic weight. With more than 6,000 India–Oman joint ventures and Indian investments exceeding $7.5 billion, particularly in the Sohar and Salalah free zones, the pact is as much about geopolitics and regional presence as it is about trade volumes, the GTRI report said.