India, Oman sign free trade deal with sweeping tariff cuts

India and Oman on Thursday signed a Comprehensive Economic Partnership Agreement (CEPA) in Muscat, a wide-ranging trade pact that gives Indian exporters duty-free access across almost the entire Omani tariff schedule and deepens cooperation on services and investment as New Delhi expands its Gulf economic footprint.

The agreement was signed by India’s commerce and industry minister Piyush Goyal and Oman’s minister of commerce, industry and investment promotion Qais bin Mohammed Al Yousef, in the presence of Prime Minister Narendra Modi and Sultan Haitham bin Tarik.

The CEPA will come into effect after both countries complete domestic ratification procedures, a process officials have indicated is expected to be completed in early 2026.

On market access, India’s commerce ministry said Oman will provide zero-duty access on 98.08% of its tariff lines, covering 99.38% of India’s exports to Oman, a concession India portrayed as unusually broad for a Gulf partner and immediately relevant for labor-intensive exports as well as higher-value manufactured goods.

The Omani tariff elimination spans most Indian exports including gems and jewelry, textiles, pharmaceuticals and automobiles.

India, in return, will liberalize tariffs on 77.79% of its tariff lines, covering nearly 95% of imports from Oman by value.

India has kept a protective ring around sensitive items. Products such as dairy and tea were excluded from India’s concessions, along with gold, silver, jewelry and footwear, reflecting political sensitivities and concerns among small manufacturers.

The pact was signed alongside a broader set of bilateral outcomes tied to Modi’s 17–18 December official visit. In the joint statement issued after the meetings, the two governments described the CEPA as a landmark step and linked it to wider goals across trade, investment, energy security and people-to-people ties in a year marking 70 years of diplomatic relations.

While tariff schedules dominate the headline, both sides have positioned the agreement as more than a goods deal. The CEPA opens opportunities in Oman’s $12.5 billion services market, where India’s current share is modest

India’s commerce ministry has described the deal as a framework to expand two-way services trade and investment ,a structure New Delhi has increasingly used in recent trade deals to convert tariff preferences into longer-term commercial presence.

The deal lands at a moment when India is trying to cushion exporters from a harsher global trade environment, with rising uncertainty and tariff risk in major markets.

For New Delhi, Oman also carries strategic weight beyond trade volumes. Its location near the Strait of Hormuz, a critical chokepoint for global oil flows, underscores how India’s Gulf trade policy is closely tied to energy security and maritime routes, analysts said.

Annual trade between India and Oman currently exceeds $10 billion, with energy a major component and Indian exports spanning manufactured goods and consumer categories.

Officials on both sides have said the agreement should help broaden the composition of bilateral trade over time, particularly if tariff cuts lead to new sourcing decisions by Gulf buyers and deeper participation by Indian firms in Omani logistics and downstream industry.

The CEPA is also significant for Muscat. It is Oman’s first bilateral trade agreement since 2006, highlighting a shift toward negotiated market access as the country seeks foreign investment and non-oil growth under its economic diversification agenda.