India and Oman have made a significant advancement in their economic partnership by signing a Comprehensive Economic Partnership Agreement (CEPA). This landmark deal was finalized during Prime Minister Narendra Modi’s recent visit to Oman and aims to strengthen trade relations between the two countries. Under this agreement, 98% of Indian exports will enter Oman duty-free, while India will eliminate tariffs on 77% of imports from Oman. This development comes at a critical time for Indian exporters dealing with challenges in various global markets.
Details of the Trade Agreement
The CEPA represents India’s second major trade agreement in West Asia, following a similar pact with the United Arab Emirates. The deal provides considerable tariff reductions, allowing Indian goods to enter Oman without duties. In exchange, India will remove tariffs on a substantial share of Omani imports, though sensitive items such as agricultural products, gold, and oil are excluded. Notably, Omani products like dates, marbles, and certain petrochemicals will also have zero-duty access, albeit in limited quantities. In the fiscal year 2025, Indian exports to Oman were valued at $4.1 billion, while imports reached $6.6 billion. This agreement aims to eliminate tariffs currently ranging from 5% to 100% on various products, paving the way for increased trade.
Opportunities for Indian Exporters
Officials expect the CEPA will significantly enhance Indian exports to Oman, projecting an increase of at least $2 billion in the near future. The agreement is expected to improve the competitiveness of Indian dairy products against imports from countries like New Zealand and Denmark. Additionally, Indian eggs, already a staple in the Omani market, are likely to further consolidate their presence. Other sectors, including marine products, automobiles, plastics, and engineering goods, are also poised to benefit from the reduced tariffs. This agreement is viewed as a strategic measure to diversify India’s trade relationships, particularly given the challenges faced in the U.S. market.
Impact on Services and Regulatory Changes
The CEPA is not confined to goods; it seeks to enhance services and professional exchanges between India and Oman. Expected changes in visa regulations will benefit service providers and professionals, making it easier for them to operate in Oman. The agreement will also open the AYUSH market for Indian traditional medicine and wellness products. Omani authorities have agreed to speed up approvals for Indian pharmaceutical products and accept halal and organic food certifications from Indian agencies, thereby improving market access for these goods. A social security agreement is also in the pipeline to further bolster bilateral relations.
Future Prospects and Strategic Significance
The signing of the CEPA is part of India’s broader strategy to diversify its trade partnerships, especially after high tariffs on Indian exports were imposed by the U.S. This agreement with Oman is considered a crucial step in this direction, complementing India’s existing trade pact with the UAE and ongoing negotiations with other Gulf nations like Qatar and Saudi Arabia. As India seeks new markets and trade opportunities, the CEPA with Oman is set to play a vital role in enhancing economic cooperation and fostering long-term growth for both countries.
Digihunt is not a financial advisor and this is not investment advice.