CEPA with Oman: Strengthening India’s economic footprint in the Gulf region

By: Team India Tracker

The strength of economic ties is demonstrated by annual remittances of about USD 2 billion, and bilateral trade has already surpassed USD 10 billion, providing significant room for growth under the CEPA framework.

India and Oman recently signed a Comprehensive Economic Partnership Agreement (CEPA), under the leadership of Prime Minister Narendra Modi, marking an important milestone in their economic partnership. The latest development in bilateral economic engagement was marked by the formal signing of the agreement by Oman's Minister of Commerce, Industry and Investment Promotion, H.E. Qais bin Mohammed Al Yousef, and India's Commerce and Industry Minister, Piyush Goyal. The CEPA reflects a shared objective to strengthen economic integration and is an important milestone in India's outreach to the Gulf. As India's primary regional partner and a crucial entry point for Indian products and services to the larger Middle East and African markets, Oman holds a strategically significant position.

With almost seven lakh Indian citizens living in Oman, including merchant families who have been there for over two or three centuries and who continue to make significant contributions to Oman's economy and society, the strong people-to-people ties further strengthen this partnership. With over 6,000 Indian businesses operating in a variety of industries, Indian companies have also made a significant impact. The strength of economic ties is demonstrated by annual remittances of about USD 2 billion, and bilateral trade has already surpassed USD 10 billion, providing significant room for growth under the CEPA framework.

This agreement is in line with India's broader strategy of establishing trade partnerships with developed and strategically important economies that do not compete with India's labour-intensive sectors while creating new growth avenues for Indian enterprises. It is the second free trade agreement that India has signed in the last six months, after the agreement with the United Kingdom. With Oman granting zero-duty access on 98.08 percent of its tariff lines, which covers 99.38 percent of India's exports to Oman, the CEPA gives India previously unheard-of gains in market access. 

Source: Ministry of Commerce and Industry

India’s exports to Oman rose steadily from about USD 2.36 billion in 2020–21 to a peak of roughly USD 4.48 billion in 2022–23, before moderating slightly to USD 4.43 billion in 2023–24 and further to around USD 4.07 billion in 2024–25, indicating some softening in export momentum after a strong post-pandemic recovery. Imports from Oman, on the other hand, grew sharply from USD 3.09 billion in 2020–21 to USD 6.84 billion in 2021–22 and peaked at nearly USD 7.91 billion in 2022–23, reflecting strong import dependence, likely driven by energy and commodity flows. This was followed by a significant decline to about USD 4.52 billion in 2023–24, before rebounding to USD 6.55 billion in 2024–25. Overall, the trade pattern highlights robust and growing bilateral engagement, with India consistently running a trade deficit with Oman, but also demonstrates the resilience and scale of the relationship, which has crossed the USD 10 billion mark in most recent years despite year-to-year volatility.

With immediate tariff elimination granted on 97.96 percent of tariff lines, all major labour-intensive industries stand to gain, including gems and jewellery, textiles, leather, footwear, sports goods, plastics, furniture, agricultural products, engineering goods, pharmaceuticals, medical devices, and automobiles. India has offered tariff liberalisation on 77.79 percent of its total tariff lines, or 12,556 lines, which together account for 94.81 percent of the value of India's imports from Oman. Tariff-rate quota-based liberalisation has largely been used to grant market access for Omani goods of export interest that are sensitive to India. In the meantime, India has protected its fundamental interests by putting sensitive goods in the exclusion category. This means that important agricultural products like dairy, tea, coffee, rubber, and tobacco, as well as gold and silver bullion, jewellery, certain labour-intensive products like sports goods and footwear, and scrap of various base metals, are not eligible for any concessions.

The services sector is very important for Indias economy. This sector is going to get a lot of benefits from the agreement. Oman buys a lot of services from countries, which is around USD 12.52 billion. The services sector of India only gets a small part of this which is 5.31 percent of Omans services imports. This means the services sector of India has a lot of room to grow and get benefits from Oman. The CEPA incorporates a comprehensive and forward-looking services package, with Oman undertaking substantial commitments across sectors such as computer-related services, business and professional services, audio-visual services, research and development, education, and health services. 

These commitments are poised to create new opportunities for Indian service providers, stimulate high-value job creation, and deepen commercial engagement between the two economies. A particularly notable feature of the agreement is the enhanced mobility framework for Indian professionals. For the first time, Oman has made extensive commitments under Mode 4, including a substantial increase in the quota for intra-corporate transferees from 20 percent to 50 percent, along with a significant extension in the permitted duration of stay for contractual service suppliers from the existing 90 days to two years, with the possibility of an additional two-year extension. The agreement also facilitates more liberal entry and stay conditions for skilled professionals in critical sectors such as accountancy, taxation, architecture, and medical and allied services, enabling smoother and deeper professional collaboration.

The CEPA further enables 100 percent foreign direct investment by Indian companies in major services sectors in Oman through commercial presence, opening up expansive opportunities for India’s services industry to scale operations in the region. Both sides have also agreed to engage in future discussions on social security coordination once Oman’s contributory social security system is implemented, reflecting a forward-looking approach toward labour mobility and the protection of workers’ interests. A landmark aspect of the agreement is Oman’s commitment on traditional medicine across all modes of supply, representing the first such comprehensive commitment undertaken by any country and creating a significant opening for India’s AYUSH and wellness sectors in the Gulf region. 

In addition to tariff and services-related provisions, the CEPA also addresses non-tariff barriers that often persist despite tariff concessions and restrict effective market access, thereby enhancing the practical benefits of the agreement. Notably, this CEPA is the first bilateral trade agreement signed by Oman with any country since its agreement with the United States in 2006, underscoring both the depth and strategic importance of the India–Oman economic partnership.