The Comprehensive Economic Partnership Agreement (CEPA) will be the final stop of the prime minister’s three-nation tour, which included Jordan and Ethiopia. Negotiated from November 2023, the pact covers goods, services and investments and is expected to enter into force in a few months after national ratification.
The FTA will be signed in the presence of Modi and the Omani head of state, along with senior officials from both sides, according to a commerce ministry official.
Modi arrived in Oman on Wednesday for a two-day visit and was received at the airport by Oman’s Deputy Prime Minister for Defense Affairs, Sayyid Shihab bin Tariq Al Said.
A free trade agreement with Oman will be the first the trade deal will be signed during the tenure of Commerce Minister Rajesh Agarwal, while it will be the sixth such pact for the Modi-led NDA government.
India is also in the last part negotiations with the European Union and the USA on separate trade arrangements.
A trade deal with Mauritius was signed in February 2021, followed by the UAE in February 2022, Australia in April 2022, EFTA in February 2024 and the UK in July 2025.
“The Indo-Oman Free Trade Agreement may not bring major trade expansion given the size of the Omani market, but it significantly strengthens India’s energy security, investment presence and regulatory access in the Persian Gulf. Its real value lies in stabilizing supply chains and deepening strategic economic ties rather than chasing large export numbers,” said Dattesh Parulekar, assistant professor of international relations at Goa University.
Expanding the business footprint
According to a report by the Global Trade Research Initiative (GTRI), the agreement broadly follows the pattern India used in its trade pact with the United Arab Emirates, signaling New Delhi’s preferred framework for economic engagement with the Gulf economies. “The India-Oman CEPA is not about dramatic trade expansion, but rather about anchoring India’s long-term economic and strategic presence in the Persian Gulf,” said Ajay Srivastava, founder of GTRI. “It strengthens supply chains, reduces regulatory friction and deepens investment ties with a partner that plays a key role in India’s energy security.”
Bilateral trade between India and Oman is estimated to be around $10.5 billion in 2024–25. India’s exports to Oman were valued at $4.1 billion, led by petroleum products such as diesel and petrol, along with machinery, aircraft, rice, iron and steel products, cosmetics and personal care products, and ceramics.
While more than 80% of Indian goods already enter Oman with an average duty of around 5%, duties can be as high as 100% on selected products. The elimination of tariffs under CEPA is expected to improve the price competitiveness of Indian exporters.
However, GTRI warns that the scope for large export gains is limited. “With a population of around five million and a GDP of around $115 billion, Oman cannot absorb exports to the extent of the larger Gulf markets,” Srivastava said. “Sustained gains for Indian exporters will depend on moving up the value chain rather than relying purely on tariff cuts.”
For Oman, the deal cements its role as a key supplier of energy and industrial inputs to India. India imported $6.6 billion worth of goods from Oman in FY25, dominated by oil, liquefied natural gas and fertilizers, along with chemicals such as methanol and anhydrous ammonia that are critical to India’s agriculture, chemical, cement and power sectors.
Regulatory, investment profits
Most of these products are already subject to low tariffs, suggesting that CEPA will strengthen existing trade flows rather than radically alter them.
Apart from tariffs, India is also seeking regulatory gains, especially in the pharmaceutical sector. According to GTRI’s assessment, CEPA may contain provisions to streamline the approval of Indian drugs that have already been approved by regulators such as the US Food and Drug Administration, the UK Medicines and Healthcare Products Regulatory Agency (MHRA) and the European Medicines Agency. “Expedited regulatory action, especially for pharmaceuticals, could bring more tangible benefits than a major reduction in tariffs,” Srivastava noted.
The pact’s strategic dimension looms larger than its business numbers. Indian investment in Oman exceeds $7.5 billion, with more than 6,000 India-Oman joint ventures, many of which are concentrated in the Sohar and Salalah Free Zones. “CEPA strengthens India’s investment footprint and geopolitical position in the Gulf,” Srivastava said. “In that sense, its true value lies outside of business statistics.”
