India has signed its second free trade agreement of the year, finalising a Comprehensive Economic Partnership Agreement with Oman just six months after its pact with the United Kingdom. Signed in Muscat, the agreement aims to strengthen cooperation in trade, investment, and services, highlighting the steadily growing economic ties between the two nations.
At a time when investors are closely tracking the possibility of an India–US trade agreement, this new FTA, signed before the end of the calendar year, sends a moderately positive signal. It reflects India’s proactive approach to expanding its global trade partnerships and improving market access for domestic businesses.
Let us understand this FTA in detail and see how it can impact the Indian economy, key sectors, and your investment portfolio.
What’s Happening?
India and Oman have signed a Comprehensive Economic Partnership Agreement, strengthening India’s economic and strategic presence in the Persian Gulf at a time when exporters are facing global challenges.
Under the CEPA, nearly 98% of Indian exports will receive duty-free access to Oman, while India will cut tariffs on about 77% of imports from Oman. Sensitive items such as agricultural products, dairy, gold, and oil and gas have been excluded from the deal. Some Omani products, such as dates, marble, and select petrochemicals, will enter India at zero duty but within fixed quantity limits.
Currently, many Indian products face import duties of 5% to 6% in Oman, while some food items attract tariffs as high as 100%. These duties are expected to be removed once the agreement comes into force in the first quarter of 2026.
India-Oman Trade – Major Imports and Exports
Oman is one of India’s key trade partners in the Gulf region, but the trade balance currently favours Oman. In 2024, total merchandise trade between the two countries crossed $10.6 billion. India’s exports stood at around $4 to $4.1 billion, while imports were higher at over $6.5 billion, highlighting a clear trade gap.
India’s exports to Oman are fairly diversified and are led by energy and industrial products. These include petroleum products such as naphtha and petrol, industrial goods like machinery, electrical equipment, and aircraft parts, and metals and minerals, including calcined alumina and iron and steel items. Agricultural produce, processed food, chemicals, and consumer goods also form an important part of India’s export basket.
On the import side, India mainly sources energy-related products from Oman. Crude oil, liquefied natural gas, and other petroleum products such as fuel oil and petroleum coke account for a large share. India also imports fertilisers and agri-inputs like urea, ammonia, and other fertiliser intermediates.
What Does This Mean for Investors?
The India–Oman CEPA sends a positive long-term signal for investors, even if the immediate market impact remains limited. The agreement improves export visibility, reduces tariff barriers, and strengthens India’s trade footprint in the Gulf region, supporting earnings stability for export-oriented companies.
Sectors that could benefit over time include engineering goods, auto components, textiles, chemicals, electronics, and gems and jewellery, as lower duties improve price competitiveness in Oman and nearby markets. Companies with existing exposure to the Middle East or plans to expand in the GCC region may see incremental order flows and margin support.
What’s Next?
India is positioning itself to become a major supplier of electronic goods to Oman, similar to the role it plays in the UAE. With bilateral trade already rising from $8.9 billion in FY24 to $10.6 billion in FY25, the CEPA is expected to accelerate this momentum. Strong investment ties, reflected in over 6,000 joint ventures and two-way investments exceeding $1.2 billion, provide a solid base for deeper economic engagement.
Moreover, government officials expect India’s exports to Oman to rise by at least $2 billion over the next one to two years as market access improves.
At a broader level, the Oman CEPA fits into India’s trade diversification strategy. While concessions on sensitive areas such as gold and oil and gas remain limited, the deal strengthens India’s presence in the Gulf and supports its use of the region as a gateway to Africa and other nearby markets. Alongside ongoing talks with Qatar, the EU, Chile, and others, the agreement highlights India’s push to expand global trade partnerships and reduce dependence on a few large export destinations.
*The article is for information purposes only. This is not investment advice.
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