India signs CEPA with Oman to provide duty-free access to labour-intensive sectors

In a move to diversify India's exports after its largest export destination (the US) imposed steep tariffs on Indian goods from August, India has signed the Comprehensive Economic Partnership Agreement (CEPA) with Oman. This free trade agreement will provide duty-free access to a host of Indian labour-intensive sectors, including engineering goods and textiles. The CEPA was signed by Commerce and Industry Minister Piyush Goyal and Oman's Minister of Commerce, Industry and Investment Promotion Qais bin Mohammed Al Yousef in Muscat. The deal is likely to be implemented by the first quarter of 2026. Talks for the agreement formally began in November 2023, and the negotiations concluded this year.

As per the agreement, Oman has offered zero-duty access on over 98 of its tariff lines or product categories, covering 99.38 per cent of India's exports to the Gulf country. All major labour-intensive sectors, including gems and jewellery, textiles, leather, footwear, sports goods, plastics, furniture, agricultural products, engineering products, pharmaceuticals, medical devices, and automobiles, will attract nil duty. These goods, at present, attract import duties in the range of 5-100 per cent in Oman. On the other hand, 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.

In July, India had inked a comprehensive trade pact with the UK, and negotiations are in the last phase with the European Union and New Zealand. India is also strengthening its presence in the Middle East nations. In May 2022, it implemented a pact with the UAE and will soon start talks with Qatar. These nations are members of the Gulf Cooperation Council (GCC). Though Oman is a small country, it has strategic importance as the country borders the Strait of Hormuz, an important maritime chokepoint. Asian companies use this passage for oil trade. Oman is also 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. 

For the first time, Oman has offered wide-ranging commitments under Mode 4 (movement of skilled professionals), including a notable increase in the quota for intra-corporate transferees from 20 per cent to 50 per cent, together with a longer permitted duration of stay for contractual service suppliers - extended from the existing 90 days to two years, with the possibility of a further two-year extension. In addition, both sides have agreed to hold future discussions on the social security pact once Oman's contributory social security system is implemented. India-Oman bilateral trade was about $10.5 billion (exports $4 billion and imports $6.54 billion) in 2024-25. The pact is expected to help additional $2 billion in the next 2-3 years. India has received $615.54 million in foreign direct investment from Oman between April 2000 and September 2025.