Key facts
- India and Oman's Comprehensive Economic Partnership Agreement (CEPA) is now in effect.
- The CEPA provides duty-free access for about 98% of Indian exports to Oman.
- Oman's geography allows its ports to serve as a reliable energy gateway even when the Strait of Hormuz is disrupted.
- India's imports from Oman increased significantly, particularly crude oil and urea.
- The agreement is viewed as enhancing India's energy and economic security.
India's trade deal with Oman, which became operational this month, is poised to offer a vital alternative energy gateway outside the Strait of Hormuz. This strategic move comes as freight movements through the critical waterway are expected to take time to normalize, even with an interim ceasefire agreement between the U.S. and Iran.
The Comprehensive Economic Partnership Agreement (CEPA) between India and Oman, signed in December, came into force on June 1. The Global Trade Research Initiative (GTRI) highlighted the pact's significance, noting that much of Oman's coastline lies outside the Strait of Hormuz, directly on the Arabian Sea and the Gulf of Oman. This geographical advantage means major Omani ports like Salalah and Duqm can remain accessible during regional conflicts or geopolitical instability, unlike many other Gulf nations that rely on shipping through the Strait.
Recent trade data underscores Oman's role as a dependable alternative. While India's imports from major Gulf economies saw a sharp decline in April 2026, imports from Oman surged by 246.4%, from $430 million to nearly $1.5 billion, primarily due to increased purchases of crude oil and urea. This contrasts with a more modest 10.3% decrease in India's exports to Oman during the same period.
The CEPA grants Indian exporters duty-free access on approximately 98.08% of Oman's tariff lines, covering about 99.38% of India's exports by value. Before the agreement, only 15.3% of Indian exports enjoyed zero-duty access. The benefits extend to sectors such as textiles, leather, footwear, gems and jewellery, engineering products, pharmaceuticals, and agricultural goods. Oman, in turn, gains from India's tariff reductions on energy, fertilizers, and industrial raw materials, which constituted the bulk of India's $7.2 billion imports from Oman in fiscal 2026.
GTRI Founder Ajay Srivastava emphasized that the pact is not merely a trade agreement but an investment in India's long-term energy and economic security, especially given the Strait of Hormuz's critical role in global energy trade, handling about 20% of global daily oil consumption and 25% of global seaborne oil trade.