The signing of the Comprehensive Economic Partnership Agreement (CEPA) between India and Oman during Prime Minister Modi’s visit to Oman in December 2025 marks a significant milestone in India’s economic diplomacy in the Gulf region. This agreement establishes a broad and progressive framework to deepen trade, services, investment, and professional mobility between the two nations. While often described as an economic instrument, CEPA’s implications extend far beyond trade figures, i.e., anchoring India’s broader strategic ambitions in the Gulf region. Essentially, the India-Oman CEPA offers near-universal duty-free access for Indian exports, wherein Oman has committed to zero duty on 98.08 percent of its tariff lines, covering roughly 99.38 percent of India’s export value. Simultaneously, India has agreed to reduce tariffs on 77.79 percent of its tariff lines, encompassing about 94.81 percent of imports from Oman. This spans across a wide range of sectors, including textiles, leather, footwear, engineering goods, plastics, pharmaceuticals, and automotive products.
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Economic gains and competitiveness boost
The instantaneous benefits of the CEPA lie in competitive price incentives for Indian exporters in the region. Indian products will now enter Omani markets at significantly reduced costs, which can help diversify export destinations at a time when global trade is marked by uncertainty. Indeed, CEPA comes amid efforts by India to “de-risk” its exports against global tariff wars, particularly with high American tariffs on certain sectors, making preferential trade links in other regions strategically valuable. Complementary measures under the CEPA — including mutual recognition of standards, faster regulatory clearances, and sanitary and phytosanitary (SPS) harmonisation — are expected to further ease market entry barriers. Another important aspect of this agreement is related to the services trade, where it envisions expanded commitments across professional, business, education, health, and technology services, coupled with enhanced mobility provisions for Indian traders. There is hope that CEPA will potentially integrate Indian human capital into the Gulf’s services landscape.
Strategic geography and geopolitical leverage
Beyond economic gains, the CEPA has a pronounced geostrategic dimension also. Oman’s strategic location at the gateway of the Strait of Hormuz makes Muscat a pivotal partner in both trade and energy security calculus. Strengthening economic ties with a country sitting astride this maritime corridor amplifies India’s presence in a region where global power competition increasingly intersects with energy geopolitics. This agreement complements India’s earlier CEPA with the United Arab Emirates (UAE) and seeks to integrate Oman into a broader network of trade and strategic partnerships. A more integrated India–Gulf trade architecture potentially bolsters New Delhi’s clout in regional economic decision-making and may lay the groundwork for deeper multilateral engagements, including prospects for a preferential trade arrangement with all the GCC nations in the future—an idea advocated by Indian policymakers and strategic thinkers alike.
Trade flows, investment, and industrial linkages
India and Oman already maintain a growing trade relationship. In FY25, bilateral trade exceeded $10.6 billion, reflecting an upward trajectory in commercial engagement in the past few years. India’s exports to Oman include a mix of industrial and consumer products, while imports are dominated by energy commodities such as crude oil and LNG, along with fertilisers and chemical inputs critical for Indian industries. CEPA’s implementation is expected to accelerate this trajectory. There is a possibility that India’s exports to Oman could increase by over $2 billion in the next 2–3 years as tariff barriers reduce and market linkages strengthen. This agreement also foreshadows enhanced investment flows in sectors such as pharma and tech services firms, which might see Oman as a gateway to the broader Gulf and African markets, using preferential access under CEPA to compete more effectively.
Challenges and structural constraints
Despite the optimism, analysts caution against overestimating short-term outcomes. Oman’s market, while strategically located, is relatively small in population and GDP terms which limits the scale of demand absorption for Indian exports. Sustained and deep trade gains will depend on improving product quality, competitiveness, and non-tariff measures. Moreover, managing tariff concessions without adversely affecting sensitive domestic sectors in both countries will require careful calibration and support. In sum, the India-Oman CEPA is not merely a trade deal but a strategic fulcrum that aligns India’s economic ambitions with its geopolitical objectives in the Gulf region. When combined with India’s broader network of free trade agreements and diplomatic engagements in the Middle East, the CEPA underscores a nuanced and multi-layered approach to foreign economic policy with the aim to not only seeking market access but also long-term regional integration and strategic balance.
The author is an assistant professor at Amity Institute of Defence and Strategic Studies (AIDSS), Amity University, Noida.
