The first piece of India's GCC trade architecture is coming online

India is about to bring the first piece of its India-GCC trade architecture online — and it’s the piece that bypasses the Strait of Hormuz. The India-Oman Comprehensive Economic Partnership Agreement (Cepa) is “probably” slated for implementation on 1 June, Indian Commerce Minister Piyush Goyal was quoted as saying on Tuesday by Hindu Businessline.

“India-Oman trade is not directly impacted by the Iran war as Oman is not affected by the Strait of Hormuz choke-point,” former Indian Ambassador to Oman JS Mukul tells EnterpriseAM. Oman’s long, open coastline and ports at Salalah, Duqm, Sur, and Sohar — all on the Arabian Sea — offer uninterrupted flows and relative insulation from regional disruptions, he adds.

The trade-flow data is already there: India’s exports to the Gulf have been largely flat since the war, but imports from Oman jumped 112% in March. “Omani exports of energy, fertilizer, and oil derivatives surged in March due to the closure of the Strait of Hormuz,” former Ambassador Anil Wadhwa tells us. “Presently, Oman is acting like an export hub for goods traffic from the Gulf countries to India" — bypassing Hormuz — with part of the spike “diversion-led and expected to normalize once shipping routes stabilize,” Mukul adds. The commercial logic underwrites the geographic one: shipping rates and war-risk premia on Oman-routed cargoes are running lower than on Hormuz-routed alternatives, Wadhwa adds.

Geography and neutrality are assets: Oman’s “role as a mediator in the run-up to the US-Iran conflict and the relative absence of US assets in its territory” have contributed to its stability, Wadhwa notes. Due to the absence of passage through the Hormuz, shipping and war-risk ins. rates are lower in the case of shipments to and from Oman, he adds.

There’s a structural insulation that predates the war. The Oman India Fertilizer Company produces urea in Oman, with India contractually committed to the bulk offtake under a long-term agreement. The joint venture keeps fertilizer imports steady regardless of regional shocks — exactly the kind of architecture every other Gulf supplier relationship now needs.

The Cepa will go hot fast, with 99% of India's export value to Oman becoming dutyfree on day one — no phase-in. Signed last December, the agreement was expected to ramp through 2026 — it is now arriving in the middle of a war that has made Omani supply routes structurally more valuable than they were when the Cepa was first negotiated. India's FY 25 imports from Oman ran USD 6.5 bn against a USD 2.4 bn trade deficit, largely energy-driven.

Why it matters: The FTA timing coincides with New Delhi publicly flagging risks of a war-driven economic shock, FX pressures, and stress across key trade corridors. Set against this backdrop, the Cepa’s rollout and Modi’s UAE visit show a clear direction — India’s response to the war is not a pullback but a tighter economic and diplomatic integration with the Gulf to secure its supply chains and safe-harbour trade.

What’s next: “A high-level delegation from Oman is visiting India within a week to work on identifying new areas of imports and exports,” Wadhwa tells us. “Major disruption would only arise if large-scale GCC-wide conflict breaks out,” he adds — a tail risk, not the base case.

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