India and Oman have formally signed a Comprehensive Economic Partnership Agreement (CEPA), marking a significant step in bilateral trade relations. The agreement was concluded in Muscat on 18 December during Prime Minister Narendra Modi’s official visit, after nearly two years of negotiations.
Under the CEPA, Oman has agreed to grant zero-duty market access on 98.08% of its tariff lines, covering 99.38% of India’s exports to the country. For Indian exporters, this represents one of the most comprehensive tariff eliminations secured by India in a Gulf economy.
Key trade outcomes
Bilateral trade between India and Oman has expanded steadily in recent years:
- FY24: USD 8.95 billion
- FY25: USD 10.61 billion
India is now Oman’s third-largest trading partner, while Indian investments in Oman have crossed USD 5 billion, more than tripling since 2020. These investments span sectors such as green steel, green ammonia, aluminium manufacturing, renewable energy, logistics and infrastructure.
The CEPA is expected to accelerate this trend by improving price competitiveness of Indian goods in the Omani market.
What zero-duty access practically means
For exporters, zero-duty access reduces landed cost and improves margins or pricing flexibility. Sectors likely to benefit include:
- Engineering goods and machinery
- Metals and aluminium products
- Chemicals and petrochemicals
- Textiles and apparel
- Food products and agricultural exports
However, exporters will still need to comply with rules of origin, product standards, customs documentation and sector-specific regulatory requirements under the agreement.
Investment and supply-chain implications
Beyond merchandise trade, the CEPA strengthens India’s positioning in Oman as a manufacturing and energy partner. With Oman emerging as a hub for green energy and downstream manufacturing, Indian companies may find new opportunities in:
- Joint ventures and project investments
- Contract manufacturing and regional distribution
- Renewable energy and sustainability-linked projects
From a tax and structuring perspective, companies will need to carefully evaluate permanent establishment exposure, withholding tax implications and treaty benefits when expanding operations.
Our perspective: what businesses should do next
For Indian companies and exporters, the CEPA creates opportunity, but not automatically. Key action points include:
- Reviewing product-wise tariff schedules under the agreement
- Ensuring eligibility under rules of origin
- Assessing GST, customs valuation and transfer pricing implications
- Evaluating supply-chain restructuring and pricing strategies
- Reviewing Oman-India tax treaty implications for investments
For clients with Gulf exposure, Oman may now become a more attractive alternative or complement to UAE-centric trade strategies.
Bottom line
The India–Oman CEPA is a meaningful trade liberalisation step, offering near-complete duty-free access for Indian exports and opening deeper investment channels. For businesses, the real benefit will depend on timely compliance planning, documentation readiness and tax-efficient structuring.
For advisors, this agreement presents an opportunity to help clients convert policy change into measurable commercial gains.