On December 18, 2025, India and Oman signed a Comprehensive Economic Partnership Agreement in Muscat. The ceremony was attended by Prime Minister Narendra Modi and Sultan Haitham bin Tariq. Commerce Minister Piyush Goyal described it as "an ambitious and balanced economic framework." The diplomatic language was routine. The strategic content was not.

The India-Oman CEPA is only India's second comprehensive trade agreement with a Gulf Cooperation Council member — the first being the UAE deal signed in February 2022. It is Oman's first bilateral trade agreement since its pact with the United States in 2006, nearly two decades ago. That Muscat chose India as the counterparty for its re-engagement with preferential trade is itself a signal.

The Numbers

Bilateral trade between India and Oman stood at approximately $10.61 billion in FY 2024-25. Oman exported $6.55 billion to India — dominated by crude oil, petroleum gas, urea, and fertilizers, which together account for over 70 per cent of Omani exports to India. India exported $4.06 billion in the other direction, a basket that includes petroleum products, basmati and parboiled rice, pharmaceuticals, engineering goods, and processed minerals. India ran a trade deficit. The CEPA is designed, in part, to address that asymmetry.

Under the agreement, Oman has granted duty-free access on 98.08 per cent of its tariff lines, covering 99.38 per cent of India's exports to the country by value. India has offered tariff liberalisation on 77.79 per cent of its lines, covering 94.81 per cent of its imports from Oman. The asymmetry in concessions — Oman offering more on paper — reflects the structural reality that India is the larger, more diversified exporter in this relationship.

What India Gains in Goods

The CEPA delivers full tariff elimination across India's most labour-intensive export sectors: gems and jewellery, textiles, leather, footwear, sports goods, plastics, furniture, engineering goods, pharmaceuticals, medical devices, and automobiles. These were not zero-rated before. The competitiveness gain for Indian exporters against rivals — particularly from East Asia and Europe — is material and immediate, with 97.96 per cent of Oman's tariff lines seeing immediate elimination upon entry into force.

India's agricultural position in Oman is already strong. India held a 10.24 per cent share in Oman's agricultural imports in 2024, ranking second among all suppliers. Major items include Basmati rice, bananas, potatoes, onions, cashew kernels, and seafood. The CEPA consolidates and expands that position. India has deployed Tariff Rate Quotas for some sensitive Omani exports — including energy commodities and fertilizers — preserving domestic policy space while offering Muscat meaningful concessions.

What India Gains in Services

The goods story is the easier one to tell. The services provisions are where the CEPA breaks new ground — and where the longer-term strategic value lies.

Oman has made commitments across 127 services sub-sectors, covering IT, computer-related services, business and professional services, education, health, audiovisual services, and research and development. The agreement permits 100 per cent Foreign Direct Investment by Indian companies in major services sectors in Oman through commercial presence. India's current share of Oman's services imports is just 5.31 per cent — a floor, not a ceiling, and now one with a structural mechanism to push it upward.

The Mode 4 provisions — governing the movement of natural persons — are the most consequential for India's professional class. Oman has raised the intra-corporate transferee quota from 20 per cent to 50 per cent. The permitted duration of stay for contractual service suppliers has been extended from 90 days to two years, extendable by a further two years. Entry and residency conditions for skilled professionals in accountancy, taxation, architecture, and healthcare have been liberalised. These are not incremental adjustments — they represent a substantive opening in a Gulf labour market that has historically restricted Indian professional mobility relative to Indian labour presence.

Separately, Oman has committed to traditional medicine and AYUSH services across all modes of supply — the first country to make such a comprehensive commitment in any trade agreement with India. This is commercially niche but symbolically significant, and positions India's wellness sector for meaningful Gulf expansion.

The Gateway Argument

The analytical value of the Oman CEPA cannot be assessed by looking at bilateral trade volumes alone. Oman's strategic location is the real variable.

Muscat sits at the convergence of the Arabian Sea and the Persian Gulf, adjacent to the Strait of Hormuz — the single most important maritime chokepoint for global energy flows. Oman's ports at Duqm and Sohar are emerging logistics hubs with significant transhipment and re-export capacity. The government of India has explicitly described Oman as a gateway to GCC markets, East Africa, and Central Asia. The commerce minister has pointed to the agreement as positioning Indian firms to establish Oman as a base for serving the broader Gulf and African markets.

This logic is not speculative. Oman already has duty-free access to the United States under its own bilateral FTA with Washington — a fact that creates indirect arbitrage opportunities for Indian goods manufactured or processed in Oman under the rules of origin framework. The 40 per cent value-addition requirement under the India-Oman CEPA limits outright circumvention, but it also creates an incentive for genuine Indian industrial investment in Oman that serves multiple markets simultaneously.

The Gulf Strategy Takes Shape

Read in isolation, the Oman deal is useful. Read alongside the UAE CEPA of 2022, it begins to look like a strategy.

India now holds preferential trade frameworks with two of the GCC's six members. Negotiations with the GCC as a bloc have stalled — Riyadh and other capitals have moved slowly and the multilateral format has proven difficult. India's response has been to go bilateral, securing market access one capital at a time. The Oman signing accelerates this approach and increases India's leverage in any eventual GCC-wide negotiation.

The two agreements are also complementary in function. Dubai, the UAE's commercial hub, is India's gateway for financial services, re-exports, and the Indian diaspora's investment flows. Oman provides a different kind of access — a manufacturing and logistics platform, a more stable and less competitive operating environment, and a maritime position that the UAE does not replicate. Together, they give India a two-node Gulf presence that neither agreement could deliver alone.

The Tariff Context

The CEPA did not emerge in a vacuum. The United States has imposed 50 per cent tariffs on Indian goods — among the highest applied to any country. Indian exporters facing a contracting American market are under structural pressure to find alternative buyers. The Gulf, with its combination of high purchasing power, proximity, and now preferential access, is the natural hedge.

Anupam Manur of the Takshashila Institution has described the renewed FTA push — which has also delivered agreements with the UK and New Zealand — as "partly an after-effect of New Delhi realizing the importance of diversifying trade partners." That framing understates the deliberateness of the Gulf pivot. India's Act West policy predates the current American tariff pressure. What the US tariff environment has done is add urgency to a strategy that was already directionally clear.

The Limits

Three structural constraints temper the optimism.

First, Oman is a small market. With a GDP below $120 billion and a population under five million, it cannot absorb Indian exports at the scale that the US, UAE, or China can. The bilateral trade ceiling is meaningful — but the ceiling is real.

Second, India's trade deficit with Oman is driven by energy imports that the CEPA does not address. India will continue importing Omani crude, gas, and fertilizers in volumes that no goods export basket will offset near-term. The deficit is structural, not policy-correctable within the CEPA's framework.

Third, Mode 4 commitments are only as valuable as their implementation. Gulf labour markets have historically distinguished between the commitment on paper and the administrative reality of professional mobility. Whether Omani authorities implement the expanded quotas and extended stays in practice will determine whether the services provisions deliver or remain aspirational.

The Signal

The India-Oman CEPA is the second data point in India's emerging Gulf trade architecture. It delivers meaningful tariff access, a serious services framework, and professional mobility provisions that address longstanding frictions. More importantly, it establishes Oman as a node in India's broader West Asia strategy — a platform, not just a market.

India has now concluded two Gulf CEPAs, a UK trade agreement, an EFTA deal, and a New Zealand FTA in rapid succession. The pattern is deliberate: bilateral agreements with partners whose export profiles do not directly compete with India's labour-intensive sectors, creating market access without sacrificing domestic protection. Oman fits that template precisely. The Strait of Hormuz is the bonus.

The Hind covers policy, power, and strategic affairs from India's perspective. Views expressed are analytical and editorial.