India–Oman trade pact to kick in from June 1: What CEPA means for trade, jobs and markets
India and Oman will implement their Comprehensive Economic Partnership Agreement from June 1, granting wider market access and boosting trade, services, and investments. The pact is expected to strengthen India's presence in the Gulf region while benefiting key export sectors
New Delhi: India and Oman Comprehensive Economic Partnership Agreement (CEPA) will come into force from June 1. The two countries will formally announce the decision on Monday.
This will be the fifth free trade agreement (FTA) implemented under the Modi government. Since 2014, India has implemented four trade pacts with” Mauritius (April 2021 implemented), Australia (December 2022 implemented), UAE (May 2022 implemented), and EFTA (implemented in October 2025 – Switzerland, Iceland, Liechtenstein, Norway).
India has signed similar deals with the UK (July 2025) and New Zealand (April 2026). It has announced the conclusion of talks with the European Union (27-nation bloc) on January 27 this year.
DIFFERENCE BETWEEN CEPA AND FTA
Both abbreviations are often used interchangeably. Modern trade agreements typically comprise around 20 chapters covering areas such as trade in goods, trade in services, investment, intellectual property rights, customs procedures, and dispute settlement mechanisms.
Other abbreviations commonly used for such trade agreements include Comprehensive Economic Cooperation Agreement (CECA), Comprehensive Economic Trade Agreement (CETA), and Economic Cooperation and Trade Agreement (ECTA).
INDIA-OMAN TRADE
During 2025-26, the bilateral trade was USD 11.18 billion (exports USD 4.02 billion and imports 7.16 billion) as compared to USD 10.61 billion in 2024-25.
Services exports to Oman rose from USD 397 Million in 2020 to USD 665 Million in 2024. The top sectors of export have been telecommunications, computer, and information, transport and travel. The imports grew from USD 101 Million in 2020 to USD 197.7 Million in 2024. The top sectors of import have been transport, travel, telecom, and other business services.
GAINS FOR INDIA
India gets 100% duty-free market access for its exports to Oman, covering 98.08% of Oman’s tariff lines (or product categories) covering 99.38% of the trade value (average of 2022-23).
Exports from India to Oman that currently face a 5% duty on goods worth USD 3.64 billion. The pact will give a boost to India’s price competitiveness.
Key sectors poised for strong gains include textiles, agricultural goods, transport equipment, precision instruments, processed food and gems & jewellery.
All zero-duty concessions kick in from “Day One” of the agreement’s entry into force.
Presently, only 15.33% of India’s export value (11.34% of tariff lines) based on the 2022-2024 average, enters the Oman at zero duty under the MFN (most favoured nation) regime.
CEPA will create new export opportunities in minerals, chemicals, base metals, machinery, plastic/rubber, transport/auto, instruments/clocks, glass/ceramic/marble, paper.
KEY SECTORAL GAINS
Zero duty access will be granted by Oman to host of Indian sectors such as Iron and steel, electric machinery, marine products, industrial machinery and copper goods.
Removal of the 5% tariff will improve the competitiveness of Indian vehicles. The pact will grant binding zero duty access for key finished medicines and vaccines.
PROTECTION OF SENSITIVE SECTORS
India has placed 2,789 tariff lines in the exclusion list under the CEPA, protecting key domestic sectors such as transport equipment, major chemicals, cereals, fruits and vegetables, spices, coffee and tea, and animal- ‘origin products.
Sensitive value chain industries including rubber, leather, textiles, footwear, petroleum oils, and mineral-based products are also shielded to safeguard manufacturing competitiveness and farmer interests.
Strategic agricultural segments including dairy products, meat, cereals, oilseeds, vegetable oils, sugar, and residues of the food-processing industry remain excluded.
GAINS IN SERVICES SECTORS
Oman’s total global services imports in 2024 were USD 12.52 billion, with India accounting for 5.31%, indicating significant untapped potential for Indian service suppliers.
Oman has undertaken strong commitments on temporary entry and stay for natural persons supplying services. The ICT (Intra-Corporate Transferees) ceiling has been raised from 20 per cent to 50 per cent, enabling Indian companies to deploy more managerial and specialist staff.
For the first time under any FTA, Oman has also undertaken commitments for a defined category of professionals, including those in accounting, engineering, medical, IT, education, construction, and consulting services.
GAINS FOR INDIA’S AGRI SECTOR
Items like natural honey, cashew, potatoes, boneless meat and bakery products, will get duty-free access to Oman. Oman has offered to remove duties on various animal products, such as cheese, curd, milk and cream, frozen fish, butter, meat, yoghurt, processed food like bread, pastry, cakes, chocolate, sugar confectionery, and mineral water; and animal and vegetable fats and oils. At present, these items attract duty in the range of 5-100 per cent in Oman.
On the other hand, Indian consumers will get cheaper dates from Oman, as India will provide zero-duty access to 2,000 tonnes of the commodity every year.
India is also giving concessions to Oman’s two traditional products, Gum Arabica (used in food, medicines and cosmetics) and Frankincense (used in the incense and perfume sector).
GAINS FOR OMAN
India is offering duty concessions on 77.79 per cent of its total tariff lines (12,556), which covers 94.81 per cent of India’s imports from Oman by value.
For products of export interest to Oman and those that are sensitive to India, the offer is mostly a tariff-rate quota (TRQ) based tariff liberalisation, which includes products like dates, marbles and petrochemical items.
INDIA STRENGTHENING PRESENCE IN MIDDLE EAST
In May 2022, India implemented a pact with the UAE and will soon start talks with Qatar. These nations are members of the Gulf Cooperation Council (GCC). India and GCC (Saudi Arabia, the UAE, Qatar, Kuwait, Oman and Bahrain) have also inked terms of reference to start trade pact negotiations.
Though Oman is a small country, it has strategic importance as it borders the Strait of Hormuz, an important maritime chokepoint. Asian companies use this passage for oil trade. Oman is an important strategic partner in the region for India, as it is a key gateway for Indian goods and services to the wider Middle Eastern and African nations.
Nearly 7 lakh Indian nationals reside in Oman, and India receives about USD 2 billion in remittances from Oman annually.
Indian enterprises have built a strong presence in Oman, with over 6,000 establishments operating across sectors. India has received USD 615.54 million in foreign direct investment from Oman between April 2000 and September 2025.
This is the first bilateral agreement that Oman has signed with any country since the US in 2006. Oman is the third-largest export destination for India among the GCC countries.
