India, Oman sign Comprehensive Economic Partnership Agreement (CEPA)

• India and Oman signed the Comprehensive Economic Partnership Agreement (CEPA) in Muscat on December 18.

• 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 agreement was inked in the presence of Prime Minister Narendra Modi and Sultan of Oman Haitham Bin Tarik. 

• This is the first bilateral agreement that Oman has signed with any country since the USA in 2006.

• The deal is likely to be implemented by the first quarter of 2026.

• This is the second Free Trade Agreement (FTA) signed by India in the last six months after the Comprehensive Economic and Trade Agreement (CETA) with the United Kingdom in July 2025.

• It is a part of strategy to sign trade agreements with developed economies that are not competing with our labour-intensive interests and provide opportunities for Indian businesses.

Significance of CEPA deal

• The CEPA marks an important milestone in India’s engagement with the Gulf region and reflects the shared commitment to deepen bilateral economic integration. 

• Oman is an important strategic partner in the region and is a key gateway for Indian goods and services to the wider Middle Eastern and African nations. 

• Oman borders the Strait of Hormuz, an important maritime chokepoint. Asian companies use this passage for oil trade.

• Nearly seven lakh Indian nationals reside in Oman, including Indian merchant families with a presence of over 200-300 years, contributing significantly to Oman’s economy and society. 

• Indian enterprises have built a strong presence in Oman, with over 6,000 Indian establishments operating across sectors. 

• Annual remittances of around $2 billion further reflect the depth of economic engagement. 

• Bilateral trade between India and Oman stands at over $10 billion, with strong potential for expansion under the CEPA framework.

• India-Oman bilateral trade was about $10.5 billion (exports $4 billion and imports $6.54 billion) in 2024-25.

• The CEPA is expected to significantly boost bilateral trade, generate employment, expand exports, strengthen supply chains, and open new avenues for deeper, long-term economic engagement between India and Oman.

Highlights of CEPA:

• The CEPA secures unprecedented tariff concessions for India from Oman. 

• Oman has offered zero-duty access on 98.08 per cent of its tariff lines, covering 99.38 per cent of India’s exports to Oman. 

• All major labour-intensive sectors including gems & jewellery, textiles, leather, footwear, sports goods, plastics, furniture, agricultural products, engineering products, pharmaceuticals, medical devices, and automobiles receive full tariff elimination.

• Out of the above, immediate tariff elimination is being offered on 97.96 per cent tariff lines.

• India is offering tariff liberalisation on 77.79 per cent of its total tariff lines  which covers 94.81 per cent of India’s imports from Oman by value. 

• For the products of export interest to Oman and which are sensitive to India, the offer is mostly a tariff-rate quota (TRQ) based tariff liberalisation.

• To safeguard its interest, sensitive products have been kept in the exclusion category by India without offering any concessions, especially agricultural products, including dairy, tea, coffee, rubber, and tobacco products; gold and silver bullion, jewellery; other labour-intensive products such as footwear, sports goods; and scrap of many base metals.

• The services sector, a strong driver of India’s economy, will also see wide-ranging benefits. 

• Oman’s substantial global services imports amounting to $12.52 billion, with the share of India’s exports in Oman's global imports basket as 5.31 per cent, indicating significant untapped potential for Indian service providers. 

• The agreement features a comprehensive and forward-looking services package, with Oman extending substantial commitments across a broad spectrum of sectors including computer-related services, business and professional services, audio-visual services, research and development, education and health services. 

• These commitments are expected to unlock significant new opportunities for Indian service providers, promote high-value job creation, and support expanding commercial engagement between the two countries.

• A major highlight of the CEPA is the enhanced mobility framework for Indian professionals. 

• 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.

• The agreement also provides for more liberal entry and stay conditions for skilled professionals in key sectors such as accountancy, taxation, architecture, medical and allied services, supporting deeper and more seamless professional engagement.

• The CEPA further provides for 100 per cent Foreign Direct Investment (FDI) by Indian companies in major services sectors in Oman through commercial presence, opening a wide avenue for India’s services industry to expand operations in the region. 

• In addition, both sides have agreed to hold future discussions on social security coordination once Oman’s contributory social security system is implemented, reflecting a forward-looking approach to facilitating labour mobility and worker protection.

• A landmark element of the agreement is Oman’s commitment on traditional medicine extended across all modes of supply representing the first such comprehensive commitment made by any country, and creating a significant opportunity for India’s AYUSH and wellness sectors to showcase its strength in the Gulf region.

(The author is a trainer for Civil Services aspirants.)