India and Oman on Thursday signed a free trade agreement that will allow duty-free access to 98% of India’s exports to the sultanate, including textiles, agricultural products and leather goods.
In return, India will reduce tariffs on Omani products such as dates, marble and petrochemicals.
The agreement is expected to enter into force in the first quarter of next year. The deal assumes significance as India faces steep 50% tariffs on its biggest export market, the US.
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The pact was signed in Muscat by Minister of Commerce and Industry Piyush Goyal and Omani Minister of Commerce, Industry and Investment Promotion Qais bin Mohammed Al Yousef in the presence of Prime Minister Narendra Modi. Oman has offered zero access to more than 98% of its tariff lines, covering 99.38% of India’s exports to the country.
Bilateral relations between the two nations are strong. Prime Minister Narendra Modi visited Oman in February 2018 and Sultan Haitham bin Tarik paid a state visit to India in December 2023, giving new impetus to ties.
Why does Oman matter?
Oman is a key partner in India’s West Asia policy and plays a significant role in promoting New Delhi’s interests in regional and multilateral forums, including the Gulf Cooperation Council (GCC), the Arab League and the Indian Ocean Rim Association (IORA).
The two nations share strong geographical, historical and cultural ties, with people-to-people relations dating back nearly 5,000 years.
Political ties between India and Oman have become increasingly strategic over the years, enhanced by regular high-level exchanges.
Before PM Modi, four Indian Prime Ministers – Rajiv Gandhi, PV Narasimha Rao, Atal Bihari Vajpayee and Manmohan Singh – visited Oman, establishing a strong tradition of high-level bilateral relations.
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Almost seven million Indian citizens live in Oman. India receives around USD 2 billion in remittances from Oman annually.
Indian businesses have built a strong presence in Oman with over 6,000 Indian branches operating across sectors. India received USD 615.54 million in foreign direct investment from Oman from April 2000 to September 2025.
This is the second trade pact India has signed in the past six months, after the agreement with Britain, and is part of a strategy to sign trade deals with developed economies that do not compete with India’s labor-intensive interests and provide opportunities for Indian businesses.
Defense cooperation
Defense cooperation has become a cornerstone of the India-Omani strategic partnership, with Oman being India’s closest defense ally in the Persian Gulf. It is the first Gulf country with which India conducts joint exercises of all three services – Army, Navy and Air Force.
The two nations also cooperate closely on maritime security in the Indian Ocean and maintain regular defense dialogues through platforms such as the Joint Military Cooperation Committee (JMCC).
A second trade agreement with a GCC member
This is also the second trade agreement that India has entered into with a GCC country. India established a similar pact with the United Arab Emirates in May 2022 and is expected to start talks with Qatar soon. Other members of the council are Bahrain, Kuwait and Saudi Arabia.
Talks on the free trade agreement, officially called CEPA (Comprehensive Economic Partnership Agreement), formally began in November 2023 and negotiations were concluded this year.
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In free trade agreements, both partners typically reduce or eliminate tariffs on as many goods as possible and loosen regulations to encourage trade in services and attract investment.
The India-Oman FTA is the sultanate’s first bilateral trade agreement since the US pact in 2006. Among the GCC countries, Oman is India’s third largest export destination. Bilateral trade between the two nations will reach approximately US$10.5 billion in 2024-25, with exports of US$4 billion and imports of US$6.54 billion.
(With input from agencies)
