India-Oman CEPA comes into force

• The India-Oman Comprehensive Economic Partnership Agreement (CEPA) came into force on June 1.

• It marks a defining milestone in bilateral economic relations and opens a transformative new chapter in strategic trade and investment cooperation between the two countries.

• It will benefit domestic exporters in sectors such as textiles, leather, plastics, marine products, automobiles, sports goods, and agri-items, as they gain preferential access to the Omani market over competitors.

• The pact was signed on December 18, 2025 in Muscat.

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

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

• Upon completion of internal processes by both parties, the agreement entered into force on June 1.

• In a CEPA, two or more countries either significantly reduce or eliminate customs duties on the maximum number of goods added between and ease norms to promote trade in services and boost investments.

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 India's second-largest trading partner in the Gulf region and serves as a strategic gateway to the wider GCC market through its advanced port infrastructure.  

• 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 reached $11.18 billion in FY 2025-26, registering a positive trend from $10.61 billion in FY 2024-25. 

• Successfully concluded through a structured negotiation process, the CEPA reinforces India’s growing economic and trade footprint and strategic presence across GCC economies, encompassing goods, services, professional mobility, regulatory cooperation, non-tariff barrier safeguards, and cooperation chapters, going well beyond tariff reduction to build a long-term economic architecture.

• 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:

• CEPA provides duty-free access for 99.38 per cent of India’s exports to Oman by value, covering 98.08 per cent of Oman’s tariff lines, making it one of the most comprehensive market access outcomes secured by India in the Gulf region.

• All zero-duty concessions come into effect immediately providing certainty and competitiveness to Indian exporters.

• Earlier, under the Most-Favored-Nation (MFN) regime, only 15.33 per cent of India’s exports entered Oman duty-free. 

• With CEPA, Indian exporters gain substantial price competitiveness in Oman’s nearly $28 billion import market.

• The agreement is expected to significantly boost MSMEs, manufacturing and employment by enhancing competitiveness in labour-intensive sectors such as gems & jewellery, textiles, leather, footwear, marine products, engineering goods, processed foods and pharmaceuticals.

• Indian exporters now compete on equal or better terms than suppliers from countries without preferential trade arrangements with Oman.

• Products protected under the exclusion list include dairy products, cereals, fruits, vegetables, edible oils, oilseeds, rubber, leather, spices and key agricultural products.

• CEPA is expected to significantly expand exports from major coastal states including Andhra Pradesh, Kerala, Tamil Nadu and Gujarat.

• It provides binding zero-duty access for medicines, vaccines and pharmaceutical ingredients.

• Oman is an important destination for India’s engineering exports. All engineering products receive zero-duty market access replacing MFN tariffs of up to 5 per cent.

• With the operationalisation of the CEPA, bilateral trade is expected to witness substantial expansion in the coming years through enhanced market access, cooperation, investment flows and deepening economic synergies.

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