Earlier in August 2025, India and Oman concluded negotiations on the Comprehensive Economic Partnership Agreement (CEPA), the official discussions for which began in November 2023.
The CEPA is expected to have significant benefit to both India and Oman primarily through the removal of tariffs and increase in direct trade. Some of the key expectations arising from the CEPA are outlined below (noting that this list is not exhaustive and that the official document has not yet been signed or released for public viewing).
Lower tariffs and increased flow of goods
Trade between India and Oman is high, with India being the fourth largest importer to Oman, and the second largest market for Oman's crude oil exports. The introduction of the CEPA will eliminate the 5% import duties in Oman, allowing Indian exporters to access the market 'tariff-free'. This will allow Indian goods to be priced competitively. Export in the following sectors within India are expected to be boosted as a direct result of the CEPA:
- Mineral oils;
- Fertilisers and inorganic chemicals;
- Organic chemicals, salt and sulphur; and
- Plastics and plastering materials.
Specifically, tariff reduction on crude oil imports will reduce material input cost for Indian manufacturers who rely on these imports and secure overall energy stability for India. In return, Oman is expected to benefit by becoming India's preferred partner for its petroleum imports, and additionally, the following Omani export sectors are expected to experience growth as a result:
- Iron and steel;
- Electronics;
- Automotive parts; and
- Rice, meat and other food products, including tea, coffee, spices, and dairy products.
Improved labour protections
Oman has a strict 'Omanisation' programme: a longstanding government policy requiring private sector companies to hire a minimum number of Omani nationals, which has the aim of progressively replacing expatriate workers with skilled Omani nationals.
There are reportedly circa. 450,000 Indian nationals living and working in Oman, with India forming the largest expatriate workforce in the country. 'Omanisation' has a significant effect on the workforce, and the CEPA (as negotiated) is expected to include a carve-out safeguarding Indian private sector employees working in Oman against prospective policy shifts. The extent of protection granted to Indian workers and professionals by the CEPA is yet to be seen.
Maritime logistics
The CEPA will increase the use of Omani ports, by encouraging Indian exporters to utilise the ports as re-exporting and logistics hubs to enhance trade opportunities for both countries.
The geographical location of ports including Duqm (toward the south of Oman) provide accessible and less congested shipping routes for connection with the Middle East, Africa and Europe, expanding India's existing trade routes and reducing dependence on congested channels. Additionally, use of Omani ports can provide Indian exporters with diversified trade routes, enabling ships to circumvent geopolitical disruptions.
Increased investment opportunities
As per the latest statistics released by the Foreign Ministry of Oman, total Indian investments into Oman is valued at approximately OMR 286.1 million. Indian companies are leading investors in the Sohar and Salalah Free Zones, with the Duqm Special Economic Zone also experiencing a growing presence of Indian investors.
The most notable Omani-Indian joint venture project to date has been the establishment of the Oman India Fertiliser Company SAOC (OIFC), which is a company set up for the construction of a modern world scale ammonia urea fertiliser manufacturing plant in Sur, Oman. This project was encouraged by the Omani and Indian governments. OIFC is 50% owned by the Oman Oil Company SAOC, with the remaining 50% ownership split between two Indian owned companies.
It would benefit India for there to be further Omani investment in projects within these sectors including infrastructure, logistics and manufacturing. The CEPA enhances the potential for future collaboration between India and Oman, with investment into the technology, tourism, green hydrogen, pharmaceuticals and mining industries expected to be prioritised.
Final thoughts
Overall, the CEPA will reduce or remove tariffs on a variety of products traded between India and Oman, and promises to deepen the trading partnership between the two countries. India will secure its energy needs and labour interests whereas Oman will secure investment avenues in the strategic infrastructure projects space. The terms of the CEPA itself are yet to be seen, but we will be following the progression of the signed agreement and its practical implications.
As a firm having presence in the Omani market since 1980 with a strong India-focussed practice, our local and international experts are uniquely placed to guide businesses trading between India and Oman on the practical implications of the CEPA. Please get in touch with our India Desk and Oman team for further information.
