India Oman CEPA Trade Pact Lowers Tariffs And Bolsters Energy Links

India and Oman have signed a Comprehensive Economic Partnership Agreement in Muscat, seeking deeper trade and investment links as part of Prime Minister Narendra Modi's four-day, three-nation tour. The deal aims to lower tariffs on many products, strengthen energy cooperation, and support long-term economic engagement between the USD 4 trillion Indian economy and Oman's smaller but strategically located market.

Bilateral trade is already sizeable. India exported goods worth USD 4.1 billion to Oman in FY'2025, while imports from Oman reached USD 6.6 billion, driven mainly by energy supplies. Currently, more than 80 per cent of Indian products enter Oman with an average duty of around 5 per cent, though some items still face tariffs of up to 100 per cent.

India Oman CEPA trade deal reshapes tariff framework

The new CEPA is expected to ease those tariff disparities. At present, duties on Indian exports to Oman range from zero on some lines to very high levels on selected meats, alcohol and tobacco. Lower customs barriers are expected to support Indian sales of fuels, manufactured goods, farm products and consumer items, while helping Omani suppliers access India's large energy and industrial input market.

India's exports to Oman in FY'2025 were led by energy products and industrial goods. Key items included naphtha worth USD 747.6 million and petrol worth USD 561 million, along with calcined alumina at USD 313 million, machinery at USD 231 million, aircraft at USD 165 million, rice at USD 182 million, iron and steel articles at USD 120 million, beauty and personal care products at USD 128.6 million, and ceramic products at USD 79.9 million.

Global Trade Research Initiative Founder Ajay Srivastava said CEPA's tariff cuts should help Indian manufacturers in Oman. "Tariff elimination under the CEPA (comprehensive economic partnership agreement) is expected to improve competitiveness for Indian industrial exports, though sustained growth will depend on quality upgrades and product differentiation in Oman's relatively small market," Global Trade Research Initiative (GTRI) Founder Ajay Srivastava said. Srivastava noted that, for India, the key expected benefit lies in merchandise exports.

India Oman CEPA trade outlook and strategic ties

Oman is also expected to benefit from more secure access to India's huge demand for energy and raw materials. According to the GTRI, India bought USD 6.6 billion of goods from Oman in FY'2025, with crude oil, liquefied natural gas and fertilisers each accounting for USD 1.1 billion. These flows support India's fuel security and farm output, and are likely to remain central under the CEPA framework.

Srivastava highlighted the importance of Omani chemicals and fuels for Indian industry and agriculture. "Chemical inputs such as methyl alcohol (USD 435 million) and anhydrous ammonia (USD 382.4 million), along with petroleum coke (USD 315 million), are critical for India's agriculture, chemicals, cement and power sectors," he said adding most of these items already enjoy low tariffs under India's other trade pacts, suggesting the CEPA will reinforce existing supply chains rather than radically reshape trade flows.

However, Srivastava also underlined the pact's structural constraints. Oman's population of about five million and GDP of nearly USD 115 billion limit the scale of long-term trade expansion with India, especially against India's 1.4 billion consumers and much larger economic base. This means gains are likely to be focused and incremental rather than very large.

Investment and strategic ties provide another pillar of the India–Oman relationship under CEPA. "With more than 6,000 India-Oman joint ventures and Indian investments exceeding USD 7.5 billion, particularly in Oman's Sohar and Salalah free zones, the CEPA is as much about geopolitics and regional presence as it is about tariffs. For India, it represents another step in cementing its economic footprint in the Middle East," Srivastava said.

The agreement was signed alongside the 14th meeting of the India–Oman Strategic Consultative Group in Muscat, co-chaired by Arun Kumar Chatterjee and Sheikh Khalifa Alharthy. Officials reviewed cooperation in defence, trade, energy, investment and people-to-people contacts, and discussed regional and global issues. The CEPA is designed to build on these links by providing a formal trade framework between the two partners.