The recent visit of Indian Prime Minister Narendra Modi to Oman culminated in the signing of a landmark CEPA (Comprehensive Economic Partnership Agreement), poised to reshape economic ties between the two nations. According to industry experts, this agreement isn’t merely a trade deal; it’s a catalyst for accelerated growth, technological collaboration, and the realization of Oman’s ambitious economic diversification goals. Alkesh Joshi, Partner and Oman Tax Leader at EY Oman, provides key insights into the transformative potential of this partnership.
A New Era of Trade: Understanding the Oman-India CEPA
The CEPA signifies a departure from traditional free trade agreements, embracing a modern, technology-driven framework. Joshi emphasizes that this isn’t simply about reducing tariffs, but about establishing a seamless trade corridor built on trust and technological efficiency. This includes streamlined customs procedures, enhanced regulatory cooperation, and deeper integration across goods, services, and investment. The agreement aims to foster a more predictable and efficient trading environment for businesses in both countries.
Current State of Bilateral Trade
The economic relationship between Oman and India is already robust. Bilateral trade reached US$10.61 billion in FY 2024–25, demonstrating a strong foundation for further expansion. Oman currently hosts over 6,000 India-Oman joint ventures, with cumulative Indian investment in the Sultanate totaling US$675 million. Conversely, Omani investment in India has exceeded US$610 million since 2000, highlighting a reciprocal flow of capital.
Oman’s Trade Surplus and Expanding Opportunities
Recent trade data reveals a favorable balance for Oman. In FY 2024–25, Oman recorded a trade surplus of US$2.48 billion with India, a significant increase from the US$94.37 million surplus recorded the previous year. This demonstrates Oman’s strong export capabilities and the growing demand for its products in the Indian market. The CEPA is expected to further amplify these trade volumes, benefiting both economies.
Market Access and Tariff Concessions
A key component of the agreement is the substantial market access granted to both nations. Oman has offered zero-duty access on 98 percent of its tariff lines for Indian goods, covering 99 percent of imports by value. India, in return, has extended tariff concessions on 78 percent of its tariff lines, encompassing 95 percent of Omani exports by value. This level of access provides crucial certainty for exporters and investors, encouraging increased trade activity. This is a significant boost for trade relations between the two countries.
Streamlining Trade: Customs Reform and Digitalization
The CEPA introduces comprehensive reforms designed to reduce trade friction. Provisions for advance rulings, single-window systems, and risk-based customs clearance are expected to significantly reduce cargo dwell times and lower compliance costs. These measures represent a clear move towards paperless trade and faster logistics, crucial for Oman’s ambition to become a leading regional trade hub.
Protecting Domestic Industries with Rules of Origin
To ensure fairness and protect domestic industries, the agreement incorporates robust rules of origin. These rules guarantee that preferential access is limited to goods with substantial value addition within the exporting country, maintaining the integrity and credibility of the CEPA.
Beyond Goods: Services, Digital Trade, and Talent Mobility
The agreement extends beyond the trade of goods, encompassing crucial areas like services liberalization. This includes professional services, IT, healthcare, education, financial services, and maritime transport. Streamlined procedures for business visitors and intra-corporate transferees will facilitate talent mobility and knowledge transfer, fostering innovation and skill development.
Positioning Oman as a Digital Trade Partner
Joshi highlights that the CEPA positions Oman and India as key digital trade partners in a region eager for tech-driven growth. The anticipated influx of Indian professionals into sectors like renewable energy, railways, solar manufacturing, fintech, food technology, and agriculture will contribute to building local capabilities and developing a skilled national workforce. This focus on economic diversification is central to Oman’s long-term strategy.
Strengthening Cooperation and Future-Focused Sectors
The agreement also strengthens regulatory cooperation, particularly in pharmaceuticals and organic products. Fast-track approvals for medicines certified by international regulators will enhance healthcare resilience, while mutual recognition of organic certification will support sustainable agriculture and niche exports. Looking ahead, the CEPA promotes collaboration in emerging sectors like the digital economy, renewable energy, space technology, defense manufacturing, and innovation ecosystems.
Supporting SMEs and Aligning with Oman Vision 2040
Dedicated provisions for small and medium enterprises (SMEs) aim to integrate them into global supply chains through digital platforms and capacity-building initiatives. Joshi emphasizes that the CEPA aligns perfectly with Oman Vision 2040, which prioritizes diversification beyond hydrocarbons and innovation-driven growth. Oman’s strategic location, investor-friendly policies – including 100% foreign ownership – and infrastructure hubs like the Duqm Special Economic Zone and Khazaen Economic City further amplify the agreement’s impact.
In conclusion, the Oman-India CEPA represents a significant milestone in the economic relationship between the two countries. It’s a powerful example of economic diplomacy driving diversification, competitiveness, and long-term growth, supporting Oman’s Vision 2040 while simultaneously advancing India’s global trade ambitions. Businesses on both sides are encouraged to explore the opportunities presented by this landmark agreement and leverage its benefits for sustainable growth and prosperity.
