The recent signing of the Comprehensive Economic Partnership Agreement (CEPA) between Oman and India marks a pivotal moment for both nations, promising a surge in Oman-India trade and a significant boost to Oman’s economic diversification efforts. This agreement, lauded by experts like Alkesh Joshi of EY Oman, transcends traditional free trade deals by embracing technology and fostering a deeper, more integrated economic relationship. With bilateral trade already exceeding $10 billion, CEPA is poised to unlock even greater potential, solidifying Oman’s position as a key regional hub and strengthening its ties with a major global economy.
A New Era for Oman-India Economic Relations
For decades, Oman and India have enjoyed a robust economic partnership, built on geographical proximity, historical ties, and mutual benefit. However, the CEPA represents a qualitative leap forward. Alkesh Joshi emphasizes that this isn’t simply about reducing tariffs, although that is a crucial component. It’s about creating a “frictionless trade corridor powered by technology and trust.” This shift towards a modern trade framework is particularly important in today’s rapidly evolving global landscape.
The agreement reflects a strategic alignment with Oman’s Vision 2040, a national plan focused on diversifying the economy away from its reliance on hydrocarbons and fostering innovation-led growth. India, with its burgeoning digital economy and manufacturing prowess, is a natural partner in achieving these goals.
Key Provisions of the CEPA and Expected Impacts
The CEPA is a comprehensive document covering a wide range of economic activities. Several key provisions are expected to have a particularly significant impact on bilateral trade.
Enhanced Market Access
One of the most immediate benefits of the CEPA is the expanded market access it provides to businesses in both countries. Oman has granted zero-duty access to Indian goods on 98% of its tariff lines, covering 99% of imports by value. In return, India has offered tariff concessions on 78% of its tariff lines, representing 95% of Omani exports by value.
This level of access provides crucial certainty for exporters and investors, encouraging them to expand operations and explore new opportunities. It’s a powerful incentive for businesses looking to capitalize on the growing demand in both markets.
Streamlined Customs Procedures and Digital Trade
The agreement introduces significant reforms to customs procedures, aiming to reduce delays and lower compliance costs. Provisions for advance rulings, single-window systems, and risk-based customs clearance will expedite the movement of goods.
Furthermore, the CEPA actively promotes digital trade, recognizing its importance in the modern economy. This includes provisions for the streamlined movement of business visitors and intra-corporate transferees, facilitating knowledge transfer and boosting talent mobility. Joshi highlights that this positions Oman and India as digital trade partners, ready to leverage the opportunities presented by tech-driven growth.
Services Liberalization and Investment Promotion
A core pillar of the CEPA is the liberalization of services trade, encompassing crucial sectors like professional services, IT, healthcare, education, financial services, and maritime transport. This will allow companies from both countries to offer their services more easily in each other’s markets, fostering competition and innovation.
Alongside services, the agreement also encourages increased investment flows. Cumulative Indian investment in Oman already stands at $675 million, with Omani investment in India exceeding $610 million since 2000. The CEPA is expected to further stimulate investment, particularly in strategic sectors.
Strengthening Oman’s Diversification Strategy
Oman’s trade balance has historically favored the Sultanate, and recent figures confirm this trend. In FY 2024-25, Oman recorded a trade surplus of $2.48 billion with India, a substantial increase from the $94.37 million surplus the previous year. The CEPA is anticipated to broaden this advantage while simultaneously expanding trade volumes for both economies.
The agreement’s focus on regulatory cooperation, particularly in pharmaceuticals and organic products, is also noteworthy. Fast-track approvals for medicines and mutual recognition of organic certifications will enhance healthcare resilience and support sustainable agriculture, aligning with Oman’s broader development goals.
Focus on Strategic Sectors and SMEs
The CEPA isn’t limited to established industries. It also prioritizes cooperation in future-focused sectors like the digital economy, renewable energy, space technology, and defense manufacturing. This forward-looking approach is crucial for ensuring long-term economic sustainability.
Recognizing the vital role of small and medium enterprises (SMEs), the agreement includes dedicated provisions to integrate them into global supply chains through digital platforms and capacity-building initiatives. This will empower SMEs to contribute more effectively to economic growth and diversification.
Oman’s Position as a Regional Trade Hub
Oman’s strategic location, coupled with its investor-friendly policies – including 100% foreign ownership – and robust infrastructure, such as the Duqm Special Economic Zone and Khazaen Economic City, make it an ideal gateway for trade between India and the wider Middle East and Africa. The CEPA amplifies these advantages, solidifying Oman’s role as a key regional trade hub.
Ultimately, the Oman-India CEPA is a testament to the power of economic diplomacy. It’s a comprehensive and forward-looking agreement that supports Oman’s Vision 2040 while simultaneously advancing India’s global trade ambitions. The agreement’s success will depend on effective implementation and continued collaboration between the two governments and the private sector. Businesses in both countries should proactively explore the opportunities presented by the CEPA to unlock new growth potential and strengthen the enduring economic partnership between Oman and India.
