India–Oman CEPA

Context

1. India and Oman have signed a Comprehensive Economic Partnership Agreement (CEPA) in Muscat.
2. The agreement aims to liberalise trade, boost services, enhance labour mobility, and strengthen investment ties.
3. This is Oman’s first bilateral trade agreement since 2006 and India’s second CEPA with a Gulf Cooperation Council (GCC) country, after the UAE (2022).

What is CEPA?

1. A Comprehensive Economic Partnership Agreement (CEPA) is a deep trade agreement that goes beyond traditional Free Trade Agreements.
2. It covers:
   1. Reduction or elimination of tariffs on goods
   2. Liberalisation of services
   3. Investment facilitation
   4. Mobility of professionals and workers
   5. Cooperation in MSMEs, innovation, and emerging sectors
3. CEPAs aim to create long-term, rules-based economic integration between partner countries.

Key Features of the India–Oman CEPA

1. Oman has offered duty-free access on 98.08% of its tariff lines, covering 38% of India’s exports to Oman.
2. India has offered liberalised tariffs on 77.79% of its tariff lines, covering 81% of imports from Oman.
3. The agreement includes important concessions in services, particularly benefiting:
   1. Indian professionals
   2. Skilled and semi-skilled workers
4. The CEPA is expected to promote investment flows, technology collaboration, and business confidence.

India–Oman Trade Profile

1. In 2024–25, India exported goods worth $4.06 billion to Oman, accounting for 93% of India’s total exports.
2. India imported goods worth $6.5 billion from Oman, making up 91% of total imports.
3. Although bilateral trade volume is modest, the CEPA aims to expand trade rapidly by removing structural barriers.

Strategic and Regional Significance

1. Oman is a strategically located country at the mouth of the Strait of Hormuz, a critical global energy chokepoint.
2. The CEPA positions Oman as a gateway for India to:
   1. The Gulf Cooperation Council (GCC)
   2. Eastern Europe
   3. Central Asia
   4. Africa
3. This aligns with India’s broader goals of diversifying trade partners and strengthening West Asia engagement.

Benefits to Labour-Intensive and Domestic Sectors

1. The agreement is expected to significantly benefit labour-intensive sectors, which generate large-scale employment.
2. Key beneficiaries include:
   1. Micro, Small and Medium Enterprises (MSMEs)
   2. Artisans and traditional industries
   3. Women-led enterprises
3. Enhanced market access and services liberalisation will support inclusive growth and job creation, especially for youth.

Services Sector and Labour Mobility

1. Services concessions under the CEPA are important for India, given its comparative advantage in skilled manpower.
2. Easier movement of professionals will:
   1. Strengthen people-to-people ties
   2. Increase remittances
   3. Improve employment opportunities for Indian workers in Oman
3. This complements India’s long-standing role as a human resource provider to the Gulf region.

Geopolitical and Economic Implications

1. The CEPA strengthens India’s presence in the Gulf amid global trade fragmentation.
2. It reflects India’s shift towards bilateral and regional trade agreements after exiting RCEP.
3. The deal enhances India’s image as a reliable economic partner and supports its ambition to be a global manufacturing and services hub.

Challenges and Way Forward

Conclusion

The India–Oman CEPA marks a significant step in deepening India’s economic engagement with the Gulf region. By offering near-complete market access, strengthening services trade, and supporting labour-intensive sectors, the agreement promotes growth, employment, and strategic connectivity. If implemented effectively, the CEPA can serve as a model for India’s future trade partnerships and reinforce its role in the emerging multipolar global economy.