India is aggressively expanding its FTA network to drive export-led growth, with the impending India-Oman CEPA holding strategic importance despite Oman’s smaller size. Bilateral trade, though historically deficit-ridden for India, shows rebalancing potential, with exports growing at 14.1% CAGR, outpacing imports. Energy dominates trade, but high-growth sectors like chemicals (122.9% CAGR) and aerospace (197% CAGR) present opportunities for technological collaboration and market dominance. The FTA could transform Oman into a gateway for Indian exports while reducing energy-trade dependency.
India is aggressively expanding its FTA network to boost exports and economic growth, having signed 14 agreements, including recent deals with EFTA and the UK, with negotiations happening with the US, EU and others. All ongoing FTA negotiations may result in over 120 preferential trade agreements for India.
This FTA push reflects India’s export-led growth strategy as it targets a US$ 5 trillion economy. With annual growth exceeding 7% and a 1.4 billion-consumer market, partners seek tariff concessions through these deals. Merchandise exports have consistently crossed $400 billion, aided by FTAs.
In the latest FTA update, Commerce Minister Piyush Goyal indicated progress on the India-Oman CEPA, stating “good news” is close. Each new agreement strengthens India’s global trade integration while creating opportunities across the manufacturing and services sectors. The comprehensive FTA strategy is systematically reducing trade barriers and enhancing India’s role in global supply chains.
While India’s trade talks with the US and EU dominate headlines, its impending FTA with Oman offers disproportionate strategic value despite the GCC nation’s smaller size. This agreement could unlock significant opportunities in energy, logistics and manufacturing while strengthening India’s foothold in the Gulf.
Oman’s unique advantages – straddling key trade routes, maintaining neutral diplomacy, and sharing centuries-old commercial ties with India – make it an underappreciated gateway to Middle Eastern and African markets. The CEPA promises to transform this historical relationship into a modern economic partnership.
While Oman ranks as India’s third-largest trading partner in the GCC after the UAE and Saudi Arabia, it currently accounts for just 7% of India’s total exports to the Gulf region. The bilateral trade relationship has historically shown a consistent deficit for India, though recent trends indicate promising growth dynamics.
While there is no clear long-term linear trend in the trade patterns, the recent five-year period reveals an important shift in momentum. India’s exports to Oman have demonstrated stronger growth at a 5-year CAGR of 14.1% compared to the 12.4% rise in imports during the same period. This emerging positive trajectory suggests India is gradually gaining greater trade relevance in the Omani market.
The trade deficit persists but shows signs of potential rebalancing, particularly as the proposed CEPA agreement could further accelerate India’s export growth. This evolving dynamic presents an opportunity to transform what has historically been an import-dominated relationship into a more balanced economic partnership. The faster-growing export figures indicate Indian products and services are finding increasing acceptance in Oman, laying the groundwork for more equitable trade relations in the coming years.
India’s trade with Oman is heavily dominated by energy products, particularly petroleum and light oils, which constitute the largest share of both imports and exports. In 2024, mineral fuels and oils (HS code 27) accounted for nearly 37% of India’s total exports to Oman, valued at $1.48 billion, with a strong five-year CAGR of 31%. However, India’s reliance on energy imports remains a key driver of its trade deficit. Beyond petroleum, India has demonstrated significant export potential in high-growth sectors such as inorganic chemicals (HS code 28) and aircraft & spacecraft components (HS code 88), which grew at remarkable CAGRs of 122.9% and 197%, respectively. Notably, India holds a substantial share in Oman’s total imports of these products, indicating strong market penetration. Given the expanding market size and India’s competitive edge in these sectors, there is significant scope for technological collaborations to enhance value addition and establish a dominant position—potentially even a near-monopoly—in these high-potential industries. Strengthening partnerships in chemicals and aerospace could not only diversify trade but also reduce Oman’s dependency on traditional energy trade while positioning India as a key supplier of advanced technological and industrial goods.
Source: ITC Trade Map
Other high-growth products that stand to benefit from an agreement are electrical machinery, pharmaceuticals, and plastics. India’s stronghold in Oman’s imports of ships & boats, organic chemicals, and iron & steel further highlights opportunities for deeper industrial collaboration. With FTAs reducing trade barriers, these sectors, alongside traditional exports like cereals and aerospace, could drive a more balanced and technologically advanced trade relationship, reinforcing India’s position in global supply chains.
While the India-Oman CEPA promises significant long-term strategic and economic value, several unresolved issues have delayed its finalisation:
A major point of contention is India’s reluctance to offer customs duty concessions on petrochemical products such as polypropylene and polyethene, which are vital for industries like plastics, packaging, and electronics. Indian manufacturers contend that Oman provides significant raw material subsidies to its petrochemical sector. Any concessions, they argue, would unfairly disadvantage Indian producers and potentially lead to market distortions.
Oman has pushed to expand the agreement to cover approximately 500 tariff lines, up from the originally proposed 200. Indian officials remain cautious, citing concerns over dilution of trade protections and the administrative burden of broader liberalisation. The expansion request, still unresolved as of the last negotiation round in March, has created a deadlock.
Indian negotiators have expressed strategic concerns about the potential misuse of the FTA by Chinese exporters. With the EU’s Carbon Border Adjustment Mechanism (CBAM) and potential U.S. trade restrictions raising barriers for Chinese goods, there is a risk that China could reroute products through Oman to exploit lower Indian tariffs. Such circumvention could undermine India’s domestic industries and the CEPA’s integrity.
India also seeks assurances regarding Oman’s long-standing ‘Omanisation’ policy, which mandates private sector firms to hire a minimum quota of Omani nationals. While this policy aims to boost local employment, it could limit job opportunities for Indian expatriates, particularly in sectors like construction, retail, and logistics, where Indian workers form a substantial part of the workforce. New Delhi is pushing to ensure that existing employment conditions remain stable post-FTA.
India sees a strategic opportunity in leveraging the CEPA to build green manufacturing hubs focused on exports. This aligns with efforts to pre-emptively tackle challenges posed by mechanisms like the EU’s CBAM, which imposes taxes on the embedded carbon emissions in imported products like steel and aluminium. Negotiators are exploring how to align the CEPA with India’s ambitions in green technology and carbon-efficient trade, but this remains a technically complex and evolving issue.
The India-Oman CEPA holds significant promise in deepening bilateral trade and strengthening India’s strategic presence in West Asia. The agreement is poised to complement the recently concluded UAE CEPA, enhancing India’s access to key markets in the Gulf region and beyond.
Potential products that stand to benefit significantly from the FTA include inorganic chemicals, aerospace components, electrical machinery, pharmaceuticals, plastics, cereals, ships and boats, organic chemicals, and iron and steel. These sectors represent both India’s competitive strengths and Oman’s growing import demands, offering opportunities for diversification and technological collaboration.
The 11th Session of the India-Oman Joint Commission Meeting reflected constructive dialogue across trade, investment, technology, food security, and renewable energy, with progress also marked by the signing of an updated Double Taxation Avoidance Agreement (DTAA). These developments set a strong institutional foundation for the CEPA and signal both nations’ commitment to overcoming hurdles through cooperation and negotiation.
As the talks advance, the CEPA’s successful conclusion will likely catalyse economic diversification, technological collaboration, and balanced trade growth, transforming a historic commercial relationship into a modern, mutually beneficial economic alliance.
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