India, Oman ink trade pact; to provide duty free access to labour-intensive sectors

Muscat, Dec 18 (PTI) India and Oman on Thursday signed a free trade agreement, which will provide duty-free access to a host of Indian labour-intensive sectors, including engineering goods and textiles.

The pact would help Indian exporters, reeling under the impact of 50 per cent tariffs imposed by the Trump administration on Indian goods, to diversify shipments in the Middle East region, a gateway to Africa and Europe.

The Comprehensive Economic Partnership Agreement (CEPA) was signed by Commerce and Industry Minister Piyush Goyal and Oman's Minister of Commerce, Industry and Investment Promotion Qais bin Mohammed Al Yousef in Muscat.

The agreement was inked in the presence of Prime Minister Narendra Modi and Sultan of Oman Haitham Bin Tarik. The deal is likely to be implemented by the first quarter of 2026.

As per the agreement, Oman has offered zero-duty access on over 98 of its tariff lines or product categories, covering 99.38 per cent of India's exports to the Gulf country.

All major labour-intensive sectors, including gems and jewellery, textiles, leather, footwear, sports goods, plastics, furniture, agricultural products, engineering products, pharmaceuticals, medical devices, and automobiles, will attract nil duty.

These goods, at present, attract import duties in the range of 5-100 per cent in Oman.

On the other hand, India is offering duty concessions on 77.79 per cent of its total tariff lines (12,556), which covers 94.81 per cent of India's imports from Oman by value.

For products of export interest to Oman and those that are sensitive to India, the offer is mostly a tariff-rate quota (TRQ) based tariff liberalisation, which includes products like dates, marbles and petrochemical items.

Addressing the India-Oman Business Forum, Modi said the pact will infuse new energy into bilateral trade and investment ties while creating opportunities for mutual growth.

Describing the CEPA as the blueprint for India-Oman's shared future, the visiting Prime Minister called upon business leaders to realise the full potential of the trade pact.

"Today, we are making a historic decision whose impact will be felt for decades to come. The Comprehensive Economic Partnership Agreement, or CEPA, will infuse our partnership with new confidence and energy in the 21st century," he said.

Goyal said the trade deal would provide opportunities for Indian exporters and professionals.

"It unlocks nearly universal duty-free access for Indian goods in the Omani market, expands services commitments across key high-growth sectors, and ensures greater mobility for Indian professionals," he said, adding that the agreement reinforces India's commitment to inclusive growth benefiting farmers, artisans, workers, and MSMEs while safeguarding core national interests.

The development is significant as the government is working to diversify India's exports after its largest export destination, the US, imposed steep tariffs on Indian goods from August.

India, in July, inked a comprehensive trade pact with the UK, and negotiations are in the last phase with the European Union and New Zealand.

India is also strengthening its presence in the Middle East nations. In May 2022, it implemented a pact with the UAE and will soon start talks with Qatar. These nations are members of the Gulf Cooperation Council (GCC).

Though Oman is a small country, it has strategic importance as the country borders the Strait of Hormuz, an important maritime chokepoint. Asian companies use this passage for oil trade.

Oman is also an important strategic partner in the region for India, as it is a key gateway for Indian goods and services to the wider Middle Eastern and African nations.

Nearly 7 lakh Indian nationals reside in Oman, and India receives about USD 2 billion in remittances from Oman annually.

Indian enterprises have built a strong presence in Oman, with over 6,000 establishments operating across sectors. India has received USD 615.54 million in foreign direct investment from Oman between April 2000 and September 2025.

Talks for the agreement formally began in November 2023, and the negotiations concluded this year.

Further to safeguard the interests of farmers and MSMEs, India has decided not to give any duty concessions in sectors like agricultural products, gold and silver bullion, jewellery, footwear, sports goods and scrap of many base metals.

On the services sector front, Oman has offered to extend substantial commitments across a broad spectrum of sectors, including computer-related services, business and professional services, audio-visual services, research and development, education and health services.

Oman's global services imports stood at USD 12.52 billion, with India's share at only 5.31 per cent. It shows a significant untapped potential for Indian service providers.

For the first time, Oman has offered wide-ranging commitments under Mode 4 (movement of skilled professionals), including a notable increase in the quota for intra-corporate transferees from 20 per cent to 50 per cent, together with a longer permitted duration of stay for contractual service suppliers - extended from the existing 90 days to two years, with the possibility of a further two-year extension.

In addition, both sides have agreed to hold future discussions on the social security pact once Oman's contributory social security system is implemented.

This is the second trade pact signed in the last six months, after the UK and is a part of a strategy to sign trade agreements with developed economies that are not competing with our labour-intensive interests and provide opportunities for Indian businesses.

This is the first bilateral agreement that Oman has signed with any country since the US in 2006. Oman is the third-largest export destination for India among the GCC countries.

India-Oman bilateral trade was about USD 10.5 billion (exports USD 4 billion and imports USD 6.54 billion) in 2024-25. The pact is expected to help additional USD 2 billion in the next 2-3 years. PTI RR CS BAL BAL