The Comprehensive Economic Partnership Agreement (CEPA) between India and Oman took effect on June 1, 2026, marking a significant development in trade and investment relations between the two countries. The agreement, first signed during Indian Prime Minister Narendra Modi’s December 2025 visit to Muscat and subsequently ratified through Royal Decree, positions Oman as India’s second CEPA partner in the Gulf region, following the United Arab Emirates.

Under the agreement, more than 98% of Oman’s tariff lines on Indian exports, accounting for nearly 99.4% of India’s export value to Oman, are eliminated, removing duties previously as high as 5%. This change immediately makes approximately $3.6 billion worth of Indian goods cheaper when entering the Omani market, setting the stage for expanded bilateral trade, which was already approaching $11 billion.

Beyond tariff reductions, the agreement aims to foster greater predictability and confidence for investors and businesses amid a challenging global economic environment. With global investment flows showing caution and supply chains being reshaped by geopolitical tensions, the CEPA serves as an instrument to reduce uncertainty. Oman, known for its relative stability in the Gulf region, recorded a nearly one-third drop in foreign direct investment in 2025 but maintained an overall FDI stock of RO 31.4 billion, reflecting long-term commitments despite short-term caution.

A distinctive feature of the India-Oman CEPA is Oman’s dual free trade statuses: it holds a free trade agreement with the United States since 2006, and now the CEPA with India. This dual access allows products qualifying as “Made in Oman” to enter both Indian and U.S. markets duty-free. Combined with Oman’s membership in the Gulf Cooperation Council and ongoing negotiations for an India–GCC free trade agreement, Oman is strategically positioned as a gateway rather than a terminus for trade.

The agreement targets various sectors including engineering goods, pharmaceuticals, food processing, chemicals, electronics, textiles, and gems—industries supported by Oman’s free zones such as those at Suhar, Salalah, Al Duqm, and Khazaen. These zones offer incentives like 100% foreign ownership, tax exemptions of up to 25 years, and streamlined licensing processes. Notably, Oman’s geographic location outside the Strait of Hormuz offers supply chain advantages, serving as a strategic alternative for India’s energy and trade routes, an important consideration amid regional dependencies and recent energy disruptions.

Private sector engagement is expected to drive the CEPA’s success. India’s vibrant startup ecosystem—the third largest globally with over 157,000 startups and 110 unicorns—along with its micro, small, and medium enterprises, already contribute nearly 40% of exports. The precedent set by India-UAE trade under CEPA, where SMEs played a critical role in increasing bilateral commerce, underscores the potential for similar dynamics with Oman. The agreement’s provisions for services and mobility, covering 127 sub-sectors and increasing the intra-corporate transferee quota from 20% to 50%, further facilitate opportunities in IT, fintech, healthcare, engineering, and education sectors.

By enabling Indian startups and Omani SMEs to operate across borders with reduced barriers, the CEPA seeks to integrate two markets, enhancing regional economic ties and supporting larger ambitions tied to both nations’ long-term economic visions.