Why is it in News?
- December 2025: India and Oman are set to sign a Free Trade Agreement (FTA), formally a Comprehensive Economic Partnership Agreement (CEPA).
- Announcement by Commerce & Industry Minister Piyush Goyal at the India–Oman Business Forum, Muscat.
- Marks India’s first bilateral FTA with a Gulf country outside the UAE model, strengthening India’s Act West strategy.
Relevance
- GS II:
- International relations: Act West policy, India–Gulf relations.
- GS III:
- Economy: external trade, FTAs/CEPAs, energy transition, logistics.
What is an FTA / CEPA?
- FTA:
- Reduces or eliminates tariffs on goods.
- Improves market access.
- CEPA (deeper than FTA):
- Trade in goods + services.
- Investment protection & facilitation.
- Customs cooperation, standards, mobility.
- India–Oman CEPA talks:
- Launched in 2023.
- Negotiated amid India’s renewed push for trade diversification.
India–Oman Economic Snapshot
- Bilateral trade (2023–24): ~$12 billion.
- India’s exports:
- Refined petroleum products.
- Iron & steel.
- Machinery, textiles, gems & jewellery.
- India’s imports:
- Crude oil, LNG.
- Fertilisers, chemicals.
- Indian diaspora in Oman:
- ~7.8 lakh, among the largest expatriate groups.
- Oman’s strategic location:
- Outside Hormuz choke point.
- Ports: Duqm, Sohar, Salalah.
Why Oman Matters Strategically for India?
- Gateway economy:
- Access to GCC, Eastern Europe, Central Asia, Africa.
- Logistics hub potential:
- Duqm port linked to India’s west coast.
- Energy partner:
- LNG supply.
- Green hydrogen ambitions.
- Geopolitical reliability:
- Stable monarchy.
- Neutral foreign policy.
Strategic Economic Gains for India
- Market diversification:
- Reduces over-dependence on traditional markets.
- Value-chain integration:
- Indian firms plug into Gulf–Africa trade routes.
- Services exports boost:
- IT, logistics, fintech, consultancy.
- Investment inflows:
- Omani sovereign & private capital into India.
- MSME opportunities:
- Preferential access to new export markets.
Strategic Economic Gains for Oman
- Economic diversification beyond hydrocarbons.
- Access to:
- India’s large consumer market.
- Skilled manpower & digital services.
- Positioning as:
- Regional trade & logistics hub.
- Partnership in:
- Green hydrogen exports.
- Food security assurance.
How This Fits India’s FTA Strategy ?
- Part of FTA 2.0 approach:
- Quality FTAs over quantity.
- Focus on trusted partners.
- Builds on:
- India–UAE CEPA.
- India–Australia ECTA.
- Supports:
- Atmanirbhar Bharat via export-led growth.
- Viksit Bharat 2047 trade vision.
Risks & Challenges
- India’s past experience:
- FTAs leading to import surges (e.g., electronics).
- Need for:
- Strong rules of origin.
- Safeguards for MSMEs.
- Infrastructure readiness:
- Logistics costs still ~13–14% of GDP.
- Services mobility:
- Visa & labour norms need clarity.
Analytical Takeaway
- India–Oman FTA is not merely a trade deal but a geo-economic bridge.
- Oman’s geography converts trade access into strategic leverage.
- Success will depend on:
- Effective implementation.
- Leveraging Oman as a regional hub, not just a bilateral partner.
Conclusion
The India–Oman CEPA aims to deepen trade, investment and energy cooperation while positioning Oman as India’s gateway to the GCC, Central Asia and Africa under India’s Act West strategy.
