India–Oman Comprehensive Economic Partnership Agreement (CEPA)

Mains: GS II – Bilateral Relations

Why in News?

Recently India and Oman signed the Comprehensive Economic Partnership Agreement (CEPA) on 18 December 2025, marking a major milestone in India’s economic diplomacy with the Gulf region.

What is the background of India–Oman relations?

Legacy – India and Oman share civilisational, maritime and people-to-people ties going back over two centuries.
Diaspora – Nearly 7 lakh Indians reside in Oman.
Indian merchant families have been present in Oman for 200–300 years.
Indian investment – Over 6,000 Indian companies operate in Oman.
Remittances – Annual remittances of around USD 2 billion flow from Oman to India.
Trade – Bilateral trade currently stands at over USD 10 billion.
Strategic importance of Oman – Oman also holds strategic importance for India as:
- A gateway to the Middle East and Africa
- A partner in maritime security in the Indian Ocean
- One of the most politically stable Gulf countries

What are the key features of the India–Oman CEPA?

Unprecedented Market Access for Indian Goods – One of the most significant outcomes of the CEPA is the near-complete tariff elimination by Oman.
- Zero-duty access on 98.08% of Oman’s tariff lines
- Covers 99.38% of India’s exports by value
- Immediate tariff elimination on nearly 98% of tariff lines
This provides Indian exporters with clear price competitiveness in the Omani market.

Boost to Labour-Intensive Manufacturing Sectors – The agreement directly benefits India’s employment-generating sectors, including:
- Textiles and garments
- Leather and footwear
- Gems and jewellery
- Engineering goods
- Plastics and furniture
- Agricultural and food products
- Pharmaceuticals and medical devices
- Automobiles
These sectors are critical for:
- MSMEs
- Women-led enterprises
- Artisans
- Export-oriented clusters
- Thus, the CEPA supports inclusive growth, employment creation, and export diversification.
Balanced Tariff Liberalisation by India – India has offered tariff concessions on:
- 77.79% of its tariff lines
- Covering 94.81% of imports from Oman by value
- However, India has carefully protected sensitive sectors by:
- Keeping key agricultural products (dairy, tea, coffee, rubber, tobacco) in the exclusion list
- Excluding gold and silver bullion, jewellery
- Protecting labour-intensive domestic sectors like footwear and sports goods
- For some sensitive Omani exports, India has used Tariff Rate Quotas (TRQs) instead of full liberalisation, ensuring policy space and domestic protection.

What are the major breakthroughs of services sector?

First-of-Its-Kind Services Commitments by Oman – Oman has offered ambitious services commitments in 127 sub-sectors, which is unprecedented.
Key sectors include:
- Computer and IT services
- Business and professional services
- Research and Development
- Audio-visual services
- Education services
- Health services
This is crucial because:
- Oman imports USD 12.52 billion worth of services globally
- India’s current share is only 5.31%, showing huge untapped potential

Enhanced Mobility for Indian Professionals (Mode 4) – A major highlight of the CEPA is the liberal mobility framework, especially under Mode 4 of services trade.
For the first time, Oman has provided:
- Commitments for Intra-Corporate Transferees
- Increase in ICT quota from 20% to 50%
- Extension of stay for Contractual Service Suppliers from 90 days to 2 years, extendable further
Liberalised entry and stay are provided for professionals in:
- Accountancy and taxation
- Architecture
- Medical and allied sectors
- This supports India’s strength as a global supplier of skilled manpower.
100% FDI for Indian Companies in Services (Mode 3) – The agreement allows 100% Foreign Direct Investment by Indian companies in major services sectors in Oman through commercial presence.
This will:
- Enable Indian firms to set up operations in Oman
- Strengthen regional value chains
- Use Oman as a base to access Africa and West Asia

What are the landmark commitments on traditional medicine and pharma?

Traditional Medicine (AYUSH) – Oman has made the first-ever comprehensive commitment on Traditional Medicine across all modes of supply.
Significance:
- Opens Gulf markets for AYUSH and wellness sectors
- Promotes medical value travel
- Strengthens cooperation in traditional healthcare systems
Pharmaceuticals and Medical Devices – The CEPA provides, Fast-tracking of marketing authorisation for drugs approved by USFDA, EMA, UKMHRA
Acceptance of GMP inspection documents
- This reduces time cost, regulatory uncertainty
- It boosts India’s image as the “Pharmacy of the Global South.”
Addressing Non-Tariff Barriers and Standards – The agreement also addresses long-standing non-tariff barriers through:
- Mutual recognition arrangements for Halal certification
- Acceptance of India’s NPOP certification for organic products
- Enhanced cooperation on standards, conformity assessment and technical regulations
- This ensures real market access, not just tariff concessions.

What are the strategic and geopolitical significance?

Strengthens India’s Gulf Strategy – CEPA deepens economic engagement with a politically stable Gulf partner.
Diversification of Trade Partners – Reduces over-dependence on a few markets and strengthens resilience.
Supports India’s Global Value Chain Integration – Particularly in services, pharma, manufacturing and logistics.
People-centric Economic Diplomacy – Benefits Indian workers, professionals, MSMEs and diaspora.
Oman’s First FTA Since 2006 – Reflects high trust and strategic alignment with India.

What lies ahead?

The India–Oman CEPA is not just a trade agreement but a strategic economic partnership that aligns with India’s goals of export growth, employment generation, services leadership, and skilled mobility.
By combining market access, services liberalisation, investment opportunities, and people-to-people ties, the agreement sets a new benchmark for India’s engagement with the Gulf region.
If effectively implemented, the CEPA has the potential to transform India–Oman relations from transactional trade to long-term economic integration, contributing meaningfully to India’s vision of becoming a global economic power with inclusive growth.

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