India and Oman have signed a Comprehensive Economic Partnership Agreement (CEPA), granting India near-universal duty-free access to the Omani market and marking New Delhi’s second freetrade agreement (FTA) with a Gulf nation after UAE, Indian Commerce Minister Piyush Goyal said in a post on X.

The agreement was signed yesterday in Muscat by commerce ministers in presence of Prime Minister Narendra Modi and Sultan Haitham bin Tarik.

Why it matters: The FTA marks an important shift in New Delhi’s otherwise reluctant approach towards freetrade agreements, Omair Anas, Middle East expert and Director at the Centre for Studies of Plural Societies told EnterpriseAM. Given India’s growing export economy, “the US tariff war has created a favourable condition for India to look beyond big markets”, he said.

What the agreement covers-

Tariff cuts: Under the CEPA, Oman will provide zero-duty access on 98% of its tariff lines, covering 99.38% of India’s exports to Oman by value, according to India’s commerce ministry.

India, in turn, will liberalise tariffs on 77.8% of its tariff lines, covering 94.8% of imports from Oman by value, largely through tariff-rate quotas to protect sensitive sectors.

Sectors affected-

“India Oman CEPA is unique as it covers services,” Anas said, adding that it could simplify Indian companies’ access to third-country markets by operating through Oman, including regions where India does not yet have preferential trade agreements.

The agreement allows 100% foreign direct investment by Indian companies in major services sectors in Oman, offering a base for such firms to expand in the region. Oman has also committed market access across 127 services sub-sectors under the CEPA, including IT and professional services, according to a press release.

What’s in, out: The agreement provides full tariff elimination for Indian exports across labour-intensive and industrial sectors including gems and jewellery, textiles and apparel, leather and footwear, sports goods, plastics, furniture, agricultural products, engineering goods, pharmaceuticals, medical devices, and automobiles. India has excluded several sensitive products from tariff concessions

Big labour concessions: The pact liberalises workforce mobility allowing easier entry and longer stays of skilled Indian professionals in key industries such as accountancy, taxation, architecture, medical and allied services. The contractual service suppliers will be permitted to stay longer than two years from the current 90 day limit, the release added.

It goes beyond trade-

Bilateral trade between India and Oman stood at USD 10.61 bn in FY 2025, up from USD 8.94 bn in FY 2024.

Indian goods were already entering Oman at low average tariffs of around 5%, limiting the incremental boost from duty cuts alone, Ajay Srivastava, founder of the Global Trade Research Initiative, told EnterpriseAM. Oman’s small domestic market also constrains the scale of export growth, he said, making a sharp jump in shipments unlikely.

With over 6k India-Oman joint ventures and Indian investments of more than USD 7.5 bn, mainly in the Sohar and Salalah free-economic-zones, “the CEPA is as much a strategic pact as a trade-deal,” Srivastava said adding that “it allows market access, mobility, and influence in a critical maritime and energy corridor.”

“The bigger hurdles are compliance and execution,” Srivastava said, noting that small businesses lack awareness of procedures, documentation and certification requirements, which could limit actual utilisation of the agreement.

The agreement’s larger value lies in strengthening India’s role in Oman’s logistics hubs, free-economic-zones and regional re-export networks, rather than in headline tariff reductions alone, Srivastava noted.

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