India and Oman Finalize Free Trade Agreement, Ensuring Duty-Free Status for 98% of Exports
India and Oman have taken a significant step in strengthening their economic ties by signing a Comprehensive Economic Partnership Agreement (CEPA). This landmark deal, finalized during Prime Minister Narendra Modi’s recent visit to Oman, aims to enhance trade relations between the two nations. Under the agreement, 98% of Indian exports will enter Oman duty-free, while India will eliminate tariffs on 77% of imports from Oman. This move comes at a crucial time for Indian exporters, who are facing challenges in various global markets.
Details of the Trade Agreement
The CEPA marks India’s second major trade agreement in West Asia, following a similar pact with the United Arab Emirates. The deal allows for significant tariff reductions, with Indian goods gaining duty-free access to Oman. In return, India will remove tariffs on a substantial portion of Omani imports, although sensitive items such as agricultural products, gold, and oil will be excluded. Notably, Omani products like dates, marbles, and certain petrochemicals will also benefit from zero-duty access, albeit in limited quantities. In the fiscal year 2025, Indian exports to Oman were valued at $4.1 billion, while imports reached $6.6 billion. The agreement is expected to eliminate tariffs that currently range from 5% to 100% on various products, paving the way for increased trade.
Opportunities for Indian Exporters
Officials anticipate that the CEPA will significantly boost Indian exports to Oman, projecting an increase of at least $2 billion in the near future. The agreement is expected to enhance the competitiveness of Indian dairy products against imports from countries like New Zealand and Denmark. Additionally, Indian eggs, which are already a staple in the Omani market, are likely to strengthen their position. Other sectors, including marine products, automobiles, plastics, and engineering goods, are also expected to benefit from the reduced tariffs. The agreement is seen as a strategic move to diversify India’s trade relationships, especially in light of recent challenges faced in the U.S. market.
Impact on Services and Regulatory Changes
The CEPA is not limited to goods; it also aims to facilitate services and professional exchanges between India and Oman. Changes in visa regulations are expected to benefit service providers and professionals, making it easier for them to operate in Oman. Furthermore, the agreement will open the AYUSH market for Indian traditional medicine and wellness products. Omani authorities have also agreed to expedite approvals for Indian pharmaceutical products and accept halal and organic food certifications from Indian agencies, enhancing market access for these goods. A social security agreement is also in the works, which could further strengthen the bilateral relationship.
Future Prospects and Strategic Significance
The signing of the CEPA is part of India’s broader strategy to diversify its trade partnerships, especially following the imposition of high tariffs by the U.S. on Indian exports. The agreement with Oman is seen as a crucial step in this direction, complementing India’s existing trade pact with the UAE and ongoing negotiations with other Gulf nations like Qatar and Saudi Arabia. As India continues to seek new markets and trade opportunities, the CEPA with Oman is poised to play a vital role in enhancing economic cooperation and fostering long-term growth for both countries.
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