New Delhi: In a move poised to significantly strengthen economic ties, the Indian Union Cabinet has approved the India-Oman Free Trade Agreement (FTA) ahead of Prime Minister Narendra Modi's scheduled visit to the Sultanate next week. The decision follows the endorsement of the trade pact by Oman's Shura Council, its lower house of parliament, paving the way for the formal signing and announcement during Modi's visit on December 17-18.
The Comprehensive Economic Partnership Agreement (CEPA), as the FTA is officially termed, marks a significant milestone in the growing strategic and economic relationship between India and Oman. Negotiations for the CEPA formally began in November 2023, with both sides reaching an agreement on all components, including text and market access offers, after three rounds of intensive discussions. While a cabinet proposal was deferred in March 2024, prompting further renegotiations, the fifth round of discussions concluded in January 2025, focusing on revised offers.
The FTA is expected to provide a significant boost to bilateral trade and investment flows between the two countries. Oman is India's third-largest export destination among the Gulf Cooperation Council (GCC) countries. In the fiscal year 2024-25, bilateral trade between India and Oman stood at $10.6 billion, with India's exports accounting for $4 billion and imports at $6.54 billion. With the CEPA, India will gain access to 98% of its products in Oman and significant access in services. The agreement is designed to reduce or eliminate customs duties on a maximum number of goods traded between the two nations, while also easing norms to promote trade in services and attract investments.
India's key imports from Oman include petroleum products and urea, which constitute over 70% of the total imports. Other significant imports are propylene and ethylene polymers, pet coke, gypsum, chemicals, iron, steel, and unwrought aluminium. The FTA is expected to enhance trade in these commodities, alongside providing opportunities for expanding cooperation in sectors like logistics, petrochemicals, manufacturing, and renewable energy.
Prime Minister Modi's visit to Oman holds considerable strategic importance, coinciding with the 70th anniversary of India-Oman diplomatic ties. Besides the FTA, discussions are expected to focus on strengthening cooperation in areas such as defence, trade, investment, energy, security, and technology. Modi's visit also coincides with discussions on India purchasing spare parts for its Jaguar fleet.
The India-Oman FTA is the second such agreement between India and a GCC member, following the FTA with the UAE which came into effect in May 2022. The FTA underscores India's commitment to strengthening its economic and strategic partnerships in the Gulf region, with Oman serving as a key anchor in its West Asia policy.
