India–Oman CEPA Agreement

Why is it in News?

• December 2025: India and Oman signed a Comprehensive Economic Partnership Agreement (CEPA) in Muscat.
• Marks:
  • India’s second CEPA in West Asia after UAE
  • A strategic response to:
    • Rising global trade protectionism (US tariffs, EU CBAM-type measures)
    • India’s need to de-risk supply chains away from China

Basics: What is a CEPA?

• A deep, comprehensive trade agreement, broader than a Free Trade Agreement (FTA).
• Covers:
  • Trade in goods
  • Trade in services
  • Investment
  • Mobility of professionals
  • Customs cooperation, standards, dispute settlement
• India’s existing CEPAs:
  • UAE, Australia (ECTA), Japan, South Korea, now Oman

Key Provisions of India–Oman CEPA

1. Market Access – Goods

Oman → India

• 98.08% of tariff lines made duty-free
• Covers 99.38% of India’s exports to Oman
• One of the most liberal tariff concessions Oman has offered globally

India → Oman

• Liberalisation of 77.79% of tariff lines
• Covers 94.81% of India’s imports from Oman

2. Trade in Services (High Relevance for India)

• Enhanced market access for Indian service providers in:
  • IT & IT-enabled services
  • Engineering & consultancy
  • Healthcare
  • Education & training
• Mobility provisions:
  • Easier movement of Indian professionals
  • Recognition of qualifications through Mutual Recognition Agreements (MRAs) (to be operationalised)
• Sector-specific gains:
  • Nursing quotas in some categories raised from 20% to 50%

3. Investment & Business Facilitation

• Predictable and transparent investment regime
• Protection against arbitrary regulatory measures
• Encourages:
  • Indian investment in Omani ports, logistics, hydrocarbons, renewables
  • Omani sovereign investment in Indian infrastructure and manufacturing

India–Oman Trade Snapshot (Data-driven)

• Total bilateral trade (2024–25): ~USD 10.6 billion
• India’s exports to Oman:
  • USD 4.06 billion
  • 0.93% of India’s total exports
• India’s imports from Oman:
  • USD 6.5 billion
  • 0.91% of India’s total imports
• India runs a trade deficit, largely due to energy imports
• CEPA aims to narrow the deficit through export expansion

Composition of Trade (2024–25)

India’s Key Exports

• Machinery & mechanical appliances
• Inorganic and organic chemicals
• Aircraft parts
• Plastics, textiles, jewellery
• Mineral fuels (re-exports) Export basket is manufacturing-intensive, aligned with Make in India

India’s Key Imports

• Crude oil & LNG-related products
• Bituminous substances
• Fertilisers
• Iron ore and minerals

Strategic Significance for India

1. Economic Significance

• Boosts exports of:
  • Engineering goods
  • Pharmaceuticals
  • Automobiles & auto components
  • Textiles and food products
• Reduces tariff disadvantage vis-à-vis:
  • China
  • ASEAN exporters
• Facilitates India’s integration into Gulf and global value chains

2. Strategic & Geopolitical Significance

• Oman’s geostrategic location:
  • At the mouth of the Strait of Hormuz
  • Gateway to West Asia, East Africa, and Europe
• Strengthens India’s:
  • West Asia outreach
  • Maritime security interests
• Complements India’s engagement with:
  • GCC
  • I2U2
  • Indo-Pacific trade diversification

3. Energy Security Dimension

• Oman is a key supplier of:
  • Crude oil
  • LNG
• CEPA deepens long-term energy partnerships
• New cooperation avenues:
  • Green hydrogen
  • Petrochemicals
  • Renewables and energy storage
  • Energy transition technologies

4. Labour & Diaspora Dimension

• Large Indian workforce in Oman
• CEPA improves:
  • Job security
  • Professional mobility
  • Services export earnings
• Supports India’s human capital export strategy

Why Oman Matters in India’s West Asia Strategy ?

1. Trade & Logistics Hub

• Ports such as Duqm, Sohar, Salalah:
  • Less congested alternatives to Gulf hubs
  • Gateways to Africa and Mediterranean markets
• Supports India’s hub-and-spoke trade model

2. Supply Chain De-risking

• Oman offers:
  • Political stability
  • Neutral foreign policy
  • Strong maritime connectivity
• Helps India reduce dependence on:
  • China-centric value chains
  • Protectionist Western markets

3. West Asia Reset

• Shifts India’s engagement from:
  • Energy-only and diaspora-centric ties
• Towards:
  • Trade–investment–technology partnership
• Complements UAE CEPA:
  • UAE as financial/re-export hub
  • Oman as logistics and gateway hub
• Together, anchor India’s western maritime arc

Concerns & Challenges

• Trade volumes still modest relative to potential
• Persistent trade imbalance
• Risks for Indian MSMEs:
  • Limited awareness
  • Compliance and certification costs
  • Non-tariff barriers
• Services gains depend on:
  • Effective implementation of mobility provisions

Way Forward

• Establish CEPA utilisation cells for exporters and MSMEs
• Fast-track:
  • Mutual Recognition Agreements (MRAs)
  • Skill and qualification recognition
• Use Oman as:
  • A platform, not merely a destination market
• Integrate CEPA with:
  • Make in India
  • PM Gati Shakti
  • India–Middle East–Europe Economic Corridor (IMEC)

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