The India-Oman Comprehensive Economic Partnership (CEPA) has several unique aspects that can accelerate not only India-Oman commercial relations but also strategically position Oman as a gateway to the Gulf region. While India and Oman shared a robust, centuries-old relationship rooted in maritime trade, the bilateral relations could not fully capitalise on the opportunities emanating from Oman’s strategic location or the deep regard the Omani leadership had for India. Oman has a 1,200-km coastline along the Arabian Sea and the Indian Ocean, and its major ports are outside the choke point of the Strait of Hormuz. Due to its strategic location, Oman has been a more significant energy supplier for China than its more resource-rich neighbours, such as the UAE or Kuwait, for several decades. China began to invest substantially in the China-Oman Industrial Park in 2016.
Sultan Qaboos, the longest-reigning Arab leader, fondly remembered his student life in India and his mentor, Dr.Shankar Dayal Sharma, India’s ninth president. The link that could have strengthened the India–Oman relations could not be sustained through high-level political engagements. There was no prime ministerial visit to Oman for nearly a decade, following Prime Minister Manmohan Singh’s visit in 2008, until Narendra Modi visited Oman in February 2018. An invitation extended to Sultan Qaboos to serve as the Chief Guest at India’s Republic Day celebrations in 2012 did not result in a visit, and no state visit took place for the remainder of his regime. While India's relations with the UAE and Saudi Arabia accelerated, progress in Indo-Omani relations was relatively slow and could not realize its full potential, despite several unique bilateral economic collaborations.
Oman was also the only GCC country to establish a joint-venture refinery in India. Bharat Oman Refinery in Bina, Madhya Pradesh, was commissioned in 2011. However, in 2021, it became a wholly owned subsidiary of Bharat Petroleum Corporation Limited of India. A nearly US$1 billion joint venture in Sur, Oman, the Oman India Fertilizer Company (OMIFCO) has been a cornerstone of industrial cooperation between the two countries since its establishment in 2006. OMIFCO supplied the bulk of its urea and ammonia production to India under a long-term take-off agreement for nearly 15 years, which expired in 2020. A new agreement, signed in 2022 for three years and covering an annual supply of one million tonnes of fertilizer, shifted to more flexible market-based arrangements. The global fertilizer price surges of 2021-22 and attendant impact on India’s fertilizer imports underscored the value of production assets as strategic hedges.
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Oman was also the first Gulf country to have a joint investment fund with India. The Oman-India Joint Investment Fund (OIJIF) was established in 2008 by the State Bank of India and the State General Reserve Fund of Oman with US$100 million. The third tranche, valued at US$300 million,was announced during Sultan Haitham’s visit in December 2023. For several years, among the Gulf countries, Oman had been the second-largest source of FDI in India, despite its relatively small economy. However, in recent years, the annual FDI inflows have been much lower.
Sameena Hameed
In recent years, there have been notable initiatives that can spur India-Oman economic ties. In 2022, Oman signed an MoU to integrate digital payment systems (RuPay and UPI), thereby facilitating real-time cross-border remittances and reducing transaction costs for the 700,000 Indian community remitting approximately US$2 billion to India. Omani ports like Duqm and Salalah are emerging as competitive transshipment alternatives due to lower handling charges and tax incentives, and the Indian Navy’s access to Duqm for docking and maintenance is a strategic advantage.
India-Oman bilateral trade is about US$10 billion, and India imports both oil and gas from the Sultanate. Oman has emerged as an important LNG supplier in recent years. India’s principal exports to Oman include petroleum products, textiles, garments, machinery, chemicals, and food staples like basmati rice, tea, and spices. Collaboration has recently moved into green energy, with India’s ACME Group investing US$2.5 billion in a green hydrogen and ammonia project at the Duqm Special Economic Zone. Thus, energy and food security underpin economic ties. The recently signed India-Oman FTA provides duty-free access to about 98 percent of India’s exports to Oman by value.
First of its kind in Oman, CEPA encompasses ambitious commitments to open 127 sub-sectors in the services,including computer-related services, business services, professional services, audiovisual services, R&D services, education services, and health services. India’s share in Oman’s global services imports, amounting to US$12.52 billion, is only 5.31 percent, underscoring significant untapped potential. First of its kind by any country, Oman’s commitment to promoting traditional medicine creates a significant opportunity for India’s AYUSH and wellness sectors to showcase their strength in the Gulf region. The agreement also enhances mobility for Indian professionals and, for the first time, Oman has made commitments to liberalise entry and stay for professionals across several key categories.
There are currently more than 6,000 Indian companies and joint ventures operating in Oman, with an estimated investment of approximately US$7.5 billion. The CEPA is not merely any Free trade agreement but is well-positioned to capitalise on Oman's strategic location and the depth of bilateral relations. This also pits Oman as a prospective flank in the India-Middle East-Europe Economic Corridor. As of October 2025, the UAE and Oman’s ambitious cross-border Hafeet Rail project is under construction and is poised to change freight transport across the Gulf region. India needs to utilise the emerging competitiveness of Omani ports for transshipment services and regional trade. The CEPA is the strategic reset for India–Oman Relations and can position Oman as a flank in the India-Middle East-Europe Corridor (IMEEC).
Professor Sameena Hameed teaches at the Centre for West Asian Studies, Jawaharlal Nehru University, New Delhi.
