India and Oman’s relationship will be moving beyond energy and labor trade. The two countries are set to expand the scope of their exchange to include supply chain security, green hydrogen, logistics, maritime defense access, and investment-led industrial projects, India's former ambassador to Oman Anil Wadhwa tells EnterpriseAM.

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Prime Minister Narendra Modi is expected to put the final signature on the India-Oman Comprehensive Economic Partnership Agreement (CEPA) tomorrow in Muscat, Press Trust of India reports. Oman’s legislature approved the agreement on Monday.

Investment at the epicenter-

FIRST UP- The India-Oman CEPA is a milestone but may not match the scale or speed of the India-UAE CEPA due to Oman’s smaller and less diversified economy, Wadhwa tells us. The agreement could instead deliver tariff stability, regulatory clarity, and preferential access for Indian exports in pharma, food, engineering goods, and services.

The logistics sector offers a potentially lucrative window for investments. The Sohar, Duqm, and Salalah industrial and logistics hubs offer avenues for Indian firms for manufacturing, as well as access to supply chains reaching the Middle East, East Africa, and Europe.

Hedging positions-

China is among the largest investors in Oman’s ports, industrial zones, and energy assets. Deeper economic engagement with India offers Muscat the chance to diversify its economic relations as a hedge against China, Wadhwa says. Indian participation in green energy and ammonia projects could also help build supply chains less dependent on China.

New Delhi is concerned that Chinese or other third-country goods could be routed through Oman to gain no-duty access. Preferential access and investment protections improve New Delhi’s economic visibility and operational comfort in the western Indian Ocean, an increasingly contested space among the Asian giants.

There’s more…

India may secure a notable diplomatic concession allowing Oman-domiciled Indian companies to freeze their current levels of hiring quotas for Omani nationals. Any flexibility on these rules is rare, Wadhwa added, but the same kind of concession was improbable in Saudi Arabia and Kuwait.

India should plan for a future where remittances from Oman no longer offset the trade deficit, cautions Wadhwa. Omanisation is structurally reducing the expatriate workforce and remittances, once a stabilizing factor, will decline as Indian workers are replaced in mid and low skill segments, he adds.

Labor red lines eased: The clause gives Indian companies predictability in workforce sourcing. It does not dilute Omanization but limits future regulatory tightening. It is a “confidence-building gesture” from Oman to attract long-term, skill-intensive Indian workforce, Wadhwa noted.

A blueprint for GCC?

Why does it matter? If signed, the CEPA is likely to support negotiations for a broader FTA with the GCC, Wadhwa says. The agreement can function as a pathfinder, he added, allowing India to demonstrate gains from greater economic ties and willingness to accommodate the priorities of its Gulf partners.

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