India-Oman Trade and Investment Ties Deepen

Syllabus: GS2/IR

Context

• India and Oman have signed the Comprehensive Economic Partnership Agreement (CEPA).
  • This is the first bilateral agreement that Oman has signed with any country since the United States of America in 2006.

Major Highlights

• FTA: Negotiations for the agreement began officially in 2023.
  • In FTAs two trading partners either significantly reduce or eliminate customs duties on a maximum number of goods traded between them. 

• They also ease norms to promote trade in services and attract investments.
• India already has a similar agreement with another GCC member UAE which came into effect in 2022.

• Duty Free Access: Oman has offered zero-duty access on 98.08% of its tariff lines, covering 99.38% of India’s exports to Oman. 
  • India is offering tariff liberalization on 77.79% of its total tariff lines which covers 94.81% of India’s imports from Oman by value. 
• Exclusion from the CEPA: To safeguard its interest, sensitive products have been kept in the exclusion category by India.
  • It includes agricultural products, including dairy, tea, coffee, rubber, and tobacco; gold and silver bullion, jewellery; other labour-intensive products such as footwear, sports goods; and scrap of many base metals.

• Enhanced Mobility: A major highlight of the CEPA is the enhanced mobility framework for Indian professionals.
  • Oman has offered wide-ranging commitments including a notable increase in the quota for Intra-Corporate Transferees from 20% to 50%.
  • Longer permitted duration of stay for Contractual Service Suppliers—extended from the existing 90 days to two years, with a further two-year extension. 
• FDI: The CEPA further provides for 100% Foreign Direct Investment by Indian companies in major services sectors in Oman through commercial presence, expanding India’s services industry to expand operations in the region.
• Traditional Medicines: Oman’s commitment on Traditional Medicine extended across all modes of supply representing the first such comprehensive commitment made by any country.
  • It will create a significant opportunity for India’s AYUSH and wellness sectors to showcase its strength in the Gulf region.

India-Oman Ties

• Diplomatic relations were formalised in 1955 and elevated to a Strategic Partnership in 2008.
• Trade Relations: Oman is India’s 28th largest trading partner in FY 2023-2024, with total bilateral trade rising from US$ 6.70 billion in 2017-18 to US$ 10.61 billion in 2024-25.
  • India ranked as Oman’s fourth largest source of non-oil imports and third largest destination for non-oil exports, underlining the diversification of economic ties beyond hydrocarbons.
• Investment flows have been similarly robust, with more than 6,000 India–Oman joint ventures operating in Oman. 
  • These ventures account for an estimated 7.5 billion US dollars in capital over time. 
  • Oman’s cumulative FDI equity inflows into India between 2000 – 2025 amounted to 605.57 million US dollars.
• Defence Cooperation: India and Oman conduct regular biennial bilateral exercises between all three services.
  • Army exercise: Al Najah
  • Air Force exercise: Eastern Bridge
  • Naval Exercise: Naseem Al Bahr
• Maritime Cooperation: Oman is at the gateway of Strait of Hormuz through which India imports one-fifth of its oil imports.
  • India signed a pact with the country in 2018 to access the Duqm port of Oman.
  • The Port of Duqm is situated on the southeastern seaboard of Oman, overlooking the Arabian Sea and the Indian Ocean. It is strategically located, in close proximity to the Chabahar port in Iran.

About GCC – It is a political and economic alliance of six Middle Eastern countries—Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman. – It was established in 1981. – It aims to achieve unity among its members based on their common objectives and their similar political and cultural identities, which are rooted in Arab and Islamic cultures.  – The presidency of the council rotates annually.

Way Ahead

• India-Oman economic relations are increasingly driven by diversification, sustainability and long-term strategic alignment. 
• The CEPA is expected to significantly boost bilateral trade, generate employment, expand exports, strengthen supply chains, and open new avenues for deeper, long-term economic engagement between India and Oman.

Source: DD