Under the agreement, nearly 99% of India’s exports will enter Oman duty-free, a provision that could give a meaningful boost to labour-intensive sectors even as overall bilateral trade remains modest at around $10 billion.
Big export opportunity for labour-intensive sectors
Former Ambassador to the WTO Jayant Dasgupta said the current composition of India–Oman trade leaves ample room for expansion, particularly on the Indian side. Oman’s exports to India are dominated by petroleum, gas and fertilisers, while India exports products such as refined petroleum, machinery, iron and steel.
“The real scope for India lies in labour-intensive sectors like textiles and clothing, leather footwear, leather garments and other leather products,” Dasgupta told CNBC-TV18. With duty-free access, these sectors could become more competitive in the Omani market, potentially translating into higher volumes and employment generation at home.
While Oman is not among India’s largest trading partners, analysts say preferential access can still matter for specific industries looking to diversify export destinations beyond traditional markets.
CEPA seen unlocking long-pending FDI potential
Beyond goods trade, the agreement is being viewed as a catalyst for deeper two-way investment ties, an area where both countries have underperformed relative to their long-standing relationship.
According to official data, foreign direct investment flows between India and Oman have remained limited over the past two decades—around $600 million in each direction. This is despite the presence of over 6,000 India–Oman joint ventures operating in Oman.
“With the signing of the CEPA, one can expect significantly higher capital infusion,” Dasgupta said, adding that the pact could give investors greater confidence and regulatory certainty. For India, higher Omani investment could help balance the trade relationship, which is currently tilted in Oman’s favour.
The agreement also allows 100% FDI by Indian companies in Oman, a move experts say could encourage Indian firms to use Oman not just as a market, but as a production and investment base.
Oman as India’s springboard to the GCC
Strategically, the CEPA fits into India’s broader push to strengthen economic ties with the Gulf Cooperation Council (GCC) region. Having already signed a trade agreement with the UAE, India now sees Oman as a complementary hub for accessing the wider Gulf market, including Saudi Arabia and other GCC economies.
Dasgupta noted that Oman offers several structural advantages for Indian investors, including abundant land availability and a policy push towards large-scale industrial production. The country is also emerging as a promising destination for renewable energy projects, including green hydrogen, where Indian companies are already exploring joint ventures.
“Oman could act as a springboard for Indian investors looking to access other GCC markets,” he said, underlining the strategic value of the CEPA beyond bilateral trade numbers.
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From modest trade to strategic economic partnership
Prime Minister Modi has described the India–Oman trade deal as “historic”, saying it would boost trade, instil confidence in investment and open new opportunities across sectors. While experts caution that gains will materialise over time, they agree that the agreement creates a framework for a deeper, more diversified economic partnership.
If duty-free access helps labour-intensive exports, fresh FDI flows follow, and Indian companies use Oman as a gateway to the Gulf, the CEPA could mark a shift from a relatively small trade relationship to a more strategic and forward-looking economic engagement.
Watch accompanying video for entire discussion.
