India and Oman are set to sign a historic CEPA during PM Modi's visit. The deal eliminates duties on 98% of exports and secures strategic energy routes.
Brajesh Mishra
In a decisive move to expand its economic footprint in West Asia, India is set to sign a Comprehensive Economic Partnership Agreement (CEPA) with Oman. The Union Cabinet approved the pact on December 12, 2025, just days after Oman's Shura Council gave its nod. The formal signing will be the centerpiece of Prime Minister Narendra Modi's visit to Muscat on December 17–18. This agreement promises to eliminate duties on 98% of Indian exports, ranging from textiles to machinery, giving Indian businesses a massive competitive edge in the $10.6 billion bilateral trade corridor.
The Context (How We Got Here)
Negotiations for the pact began in November 2023, driven by a mutual desire to diversify beyond oil. For Oman, under Sultan Haitham bin Tarik, this deal is a pillar of its "Vision 2040" to modernize the economy. For India, it follows the successful template of the UAE trade deal. The agreement comes at a critical time, offering Indian exporters relief from the current 5% average tariff, leveling the playing field against competitors who already enjoy preferential access.
While headlines focus on "duty-free trade," the deeper story is the "Strait of Hormuz Insurance." Oman isn't just a market; it's a geostrategic anchor sitting at the mouth of the Persian Gulf's most volatile choke point. By knitting the two economies together with a CEPA, India is effectively buying an insurance policy for its energy security. Furthermore, with the port of Duqm already accessible to the Indian Navy, this trade deal cements a logistics alliance that bypasses potential bottlenecks in the Gulf. It’s a trade deal with a naval backbone.
Beyond goods, this pact is a trojan horse for "Fintech Diplomacy." The deal is expected to pave the way for linking India's UPI with Omani payment systems, revolutionizing how the massive Indian diaspora remits money. Strategically, it serves as a backdoor entry into the wider Gulf Cooperation Council (GCC) market, where a collective trade deal remains stalled. If India can't sign with the whole bloc, it will sign with them one by one—starting with the most strategic partner.
If trade deals are the new military alliances, has India just secured its most vital flank in the Middle East without firing a shot?
When was the India-Oman free trade agreement approved? The agreement, officially known as the Comprehensive Economic Partnership Agreement (CEPA), was approved by the Union Cabinet of India on December 12, 2025. On the Omani side, the Shura Council (Lower House) approved the draft on December 11, 2025.
What are the benefits of the India-Oman CEPA for Indian exporters? The pact will eliminate customs duties on 98% of Indian exports to Oman. Key beneficiaries include sectors like textiles, gems and jewellery, leather, automobiles, and machinery, which currently face a 5% import duty.
How much is the current trade between India and Oman? Bilateral trade between the two nations stood at approximately $10.6 billion in the fiscal year 2024-25. The new agreement aims to significantly boost this volume by removing tariff barriers.
Why is Oman strategically important for India? Oman is located at the mouth of the Strait of Hormuz, a critical choke point for global oil supplies. A strong economic partnership ensures India has a stable ally for energy security and logistics, including access to the strategic Duqm port.
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