Prof D Mukherjee
mukhopadhyay.dinabandhu@gmail.com
The India-Oman relationship reached a historic milestone on 18 December 2025 with the conferment of the Order of Oman, the Sultanate’s highest civilian honour, on Prime Minister Narendra Modi, coinciding with the signing of the Comprehensive Economic Partnership Agreement (CEPA). This event marked the beginning of a new phase in economic cooperation between the two nations. India and Oman have shared centuries of trade, maritime exchange, and cultural ties, which have shaped enduring bilateral relations. In FY 2024-25, bilateral trade reached USD 10.61 billion, reflecting an 18.6 percent year-on-year increase and demonstrating the deepening of commercial ties as per Money control, 2025; Embassy of India, 2025. The CEPA, effectively a Free Trade Agreement, is slated to take effect in the first quarter of FY 2026, offering zero-duty access on over 98 percent of Indian exports to Oman alongside reciprocal tariff liberalisation. Its timing is strategically significant amid global trade volatility, rising protectionism in markets such as the United States, and shifting geopolitical alignments, making it both an economic and strategic instrument within the Indo-Gulf framework. During the summit in Muscat, Prime Minister Modi met His Majesty Sultan Haitham bin Tarik for private and delegation-level discussions. The CEPA signing, held at 4:58 PM local time, was part of a broader programme of high-level engagements at the Royal Palace, underscoring the visit’s diplomatic importance. The day concluded with the Order of Oman, recognising PM Modi’s leadership and his pivotal role in strengthening political, economic, and strategic ties. Collectively, the summit, CEPA, and this honour transformed 18 December 2025 into a landmark moment, symbolising enduring trust and a forward-looking partnership.
India and Oman share a relationship that predates modern nation-states, rooted in extensive maritime trade across the Indian Ocean. As early as the first millennium CE, Indian merchants visited Omani ports, trading spices, textiles, and valuable goods. These exchanges fostered durable ties extending beyond commerce to culture, religion, and people-to-people contact, notably through the Indian diaspora in Oman, which continues contributing to both economies. Diplomatically, the two countries marked 70 years of formal relations in 2025, reaffirming deep civilisational and strategic ties. Cooperation spans defence, education, and cultural partnerships, reflecting mutual respect for heritage. Oman’s engagement with India has consistently been guided by goodwill and strategic trust, aligning with India’s Act East and neighbourhood-first policies. This historical foundation strengthens the contemporary bilateral framework, positioning India and Oman as economic partners and stakeholders in regional stability. The conferment of the Order of Oman on India’s Prime Minister symbolises this enduring bond, affirming continuity while marking a transition toward a deeper, globally significant partnership.
The summit concluded with a CEPA-functioning as a Free Trade Agreement-designed to liberalise bilateral trade, stimulate investment, and expand cooperation in services. The agreement is attributed with ‘zero-duty access on over 98 percent of Omani tariff lines’ covering approximately 99.38 percent of India’s export value to Oman, including key labour-intensive sectors such as textiles, leather, pharmaceuticals, engineering goods, and automobiles . In reciprocity, India would reduce tariffs on nearly 77 percent of its tariff lines, to the tune of 95 percent of Oman’s exports to India by value. Beyond merchandise trade, the CEPA encompasses services, investment facilitation, and eased professional mobility, which is particularly significant for Indian skilled professionals and SMEs seeking opportunities in Oman’s growing economy. The agreement also introduces select quota arrangements for sensitive products, including dates and petrochemicals, to maintain trade balance. This FTA has been concluded at a time of heightened global trade uncertainty, marked by elevated U.S. tariffs on certain Indian exports and ongoing India-U.S. trade negotiations as per available source of information. In this context, the India-Oman CEPA plays a strategic role by diversifying export destinations, reducing tariff exposure, and reinforcing supply-chain resilience, while advancing India’s wider trade diplomacy objectives.
The India-Oman Free Trade Agreement marks a strategic shift in a transforming global order shaped by rising multipolar power centres, post-Ukraine geopolitical changes, and growing economic nationalism. As global trade adapts to major-power tensions, particularly U.S.-China rivalry and evolving EU-U.S. dynamics, India’s engagement with the Gulf gains strategic significance. Oman’s location along the Strait of Hormuz, a corridor for nearly 20 percent of global crude oil supplies, adds geopolitical weight to the CEPA. The agreement strengthens India’s presence in West Asia while supporting defence, maritime security, and regional economic integration. Amid strained Western-centric trade blocs, bilateral FTAs enhance the strategic autonomy and resilience of middle powers like India. For Oman, deeper ties diversify partnerships beyond traditional Western markets and balance relations with emerging Asian economies. The FTA also boosts regional connectivity, reduces dependence on any single actor, and exemplifies adaptive diplomacy aligned with long-term strategic and economic goals.
The CEPA presents significant economic prospects for both India and Oman amid a dynamic global trade environment. For India, it offers duty-free access on 98 percent of exports to Oman, valued at around USD 4.07 billion in FY 2024-25, while opening avenues into broader GCC markets through enhanced connectivity. Key sectors-including engineering goods, textiles, pharmaceuticals, and petrochemicals-could gain an additional USD 2 billion in export value over 2-3 years. For Oman, tariff liberalisation covering nearly 95 percent of exports to India strengthens competitiveness in petrochemicals, marble, dates, and other products. The agreement also promotes investment, services collaboration, and professional mobility, supporting employment and localisation, aligning with Oman’s Vision 2040. Compared with global economies like the EU, U.S., China, South Korea, and Japan, the India-Oman FTA offers complementary opportunities, reinforcing India’s diversified FTA network and its ability to balance major global influences while advancing south-south cooperation.
While the CEPA presents substantial opportunities, its implementation faces challenges. Domestic sensitivities and sectoral exclusions-including dairy, certain agricultural products, and tariff-protected items-require careful regulation to protect Indian farmers and MSMEs. Trade imbalances, due to India’s energy imports from Oman, necessitate export diversification and promotion of value-added goods. Logistical and regulatory alignment, including customs procedures and standards, demands ongoing institutional coordination. Furthermore, global economic volatility, driven by inflation, currency shifts, and supply chain disruptions, could affect expected gains without exporter support. Finally, geopolitical uncertainties, including Gulf dynamics and wider power realignments, require flexible strategies to safeguard the FTA’s benefits.
To fully harness the economic and strategic potential of the India-Oman Free Trade Agreement, both countries need a forward-looking, adaptive approach to implementation. Export diversification is central, moving beyond traditional trade sectors toward high-growth and future-oriented industries. By incentivising sectors such as advanced technology, renewable energy, digital services, and healthcare, India and Oman can foster more resilient, value-added trade flows less vulnerable to global market fluctuations. Equally crucial is the integration of SMEs and MSMEs into the FTA framework. As vital contributors to both economies, these enterprises require targeted support-including skill development, capacity building, access to finance, and compliance assistance-to benefit from tariff reductions and expanded market access. Without such measures, advantages may be disproportionately concentrated among larger firms.
Institutional mechanisms will further ensure smooth implementation. Establishing joint working groups for customs facilitation, standards harmonisation, and digital trade governance can reduce procedural delays and non-tariff barriers, improving transparency, predictability, and overall ease of doing business. Strategic connectivity investments in logistics, infrastructure, port development, multimodal transport, and digital trade corridors will enhance supply chain integration, lower transaction costs, and strengthen competitiveness in regional and global markets.
Given global economic volatility, the FTA must remain flexible. Periodic reviews of provisions will allow recalibration to protect sensitive domestic sectors while expanding liberalisation where mutual benefits exist. Finally, the FTA should operate within a broader geopolitical and strategic framework. Aligning trade and investment with defence, maritime security, energy, and regional stability initiatives will reinforce long-term resilience. This holistic approach ensures the India-Oman FTA is not just a trade instrument but a cornerstone for enduring economic and strategic convergence.
The India-Oman FTA signifies a watershed in bilateral relations, transcending conventional trade agreements to forge a strategic alliance in a multipolar world. This CEPA encapsulates mutually reinforcing economic growth, diversified market access, and geopolitical co-operation tailored to contemporary global uncertainties. By granting substantial tariff liberalisation and expanding services and investment cooperation, both countries position themselves as proactive architects of regional stability and inclusive prosperity. In conferring the Order of Oman on Prime Minister Narendra Modi, it not only honours a leader but recognise a shared vision-one that binds India and Oman through history, commerce, and mutual respect. The successful implementation of this accord will not only invigorate bilateral ties but also set a precedent for synergistic south-south partnerships that resonate far beyond the Indian Ocean. The Oeder Oman is conferred on PM Modi in recognition of his exemplary global leadership as the beacon to the road of emerging multipolar geopolitics order and future would assess its actual impact on only India-Oman bilateral foreign retaliations but across the globe.
(The columnist is an educationist, a management scientist, an independent researcher and Member of the (IIMSTC), Bengaluru.)
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