The India-Oman Comprehensive Economic Partnership Agreement (CEPA), signed on December 18, 2025, officially came into effect on June 1, 2026. This pivotal agreement is poised to reshape India's trade landscape in West Asia, not only by fostering greater bilateral commerce but also by establishing new, secure maritime routes.
The CEPA provides a robust framework encompassing trade in goods and services, investment, professional mobility, and regulatory cooperation. This broad scope aims to deepen economic ties between the two nations, offering stability and growth opportunities for businesses on both sides.
Boosting Bilateral Trade and Market Access
The economic impact of the CEPA is substantial. Bilateral trade between India and Oman witnessed a 5.41% increase, reaching $11.18 billion in FY26, up from $10.6 billion in FY25. A cornerstone of the agreement is India's enhanced market access to Oman.
- India secures 100% duty-free market access across 98.08% of Oman's tariff lines, covering 99.38% of India's export value.
- These benefits are effective immediately, a significant improvement from the previous Most Favoured Nation (MFN) regime, under which only 15.33% of India's exports entered Oman duty-free.
- This substantial tariff reduction is expected to provide Indian exporters with a considerable competitive edge in Oman's nearly $28 billion import market.
Commerce and Industry Minister Piyush Goyal hailed the CEPA as a new milestone, heralding a new era of economic partnership. The agreement is anticipated to bring significant gains for India's micro, small, and medium enterprises (MSMEs) and unlock opportunities in key sectors such as textiles, gems and jewellery, transport equipment, precision instruments, and processed foods.
Oman: A Strategic Gateway Amid Geopolitical Shifts
Beyond direct trade benefits, the CEPA holds critical geopolitical significance for India. It arrives at a time of heightened regional instability, which has often disrupted traditional export routes to West Asia, particularly the Strait of Hormuz. Oman's major ports, including Salalah and Duqm, are set to become indispensable accessible gateways for Indian trade, even when the Strait of Hormuz faces closures or risks.
Oman, already India's second-largest trading partner in the Gulf, is strategically positioned to serve as a vital entry point to the broader GCC market, thanks to its advanced port infrastructure. Its logistics hubs at Sohar, Duqm, and Salalah offer Indian exporters improved access not only to Oman but also to the wider Gulf Cooperation Council (GCC) and East African markets.
A report by the Global Trade Research Initiative underscored this advantage, noting how the ongoing Gulf conflict had impacted trade flows. While India's imports from major Gulf economies generally fell sharply from $15 billion in April 2025 to $9.8 billion in April 2026, and exports dropped from $4.4 billion to $2.7 billion, Oman proved to be a notable exception. India's imports from Oman surged by 246.4% to $1.5 billion (from $430 million), driven by increased purchases of crude oil and urea. Meanwhile, India's exports to Oman declined by only 10.3%.
“The experience shows that Oman can act as a dependable alternative trade and energy gateway for India when the Strait of Hormuz becomes risky or congested,” stated the report.
In a reciprocal move, India has offered tariff liberalisation on 77.79% of tariff lines, covering 94.81% of imports from Oman by value. However, strong safeguards have been maintained for sensitive domestic sectors, with an exclusion list including dairy products, cereals, fruits, vegetables, edible oils, oilseeds, rubber, leather, spices, and other key agricultural products.