India-Oman free trade pact to open new economic gateway with Gulf
The India-Oman CEPA is more than a tariff deal as it will open up a strategic economic bridge between South Asia and the Gulf. It offers India tariff-free access to a receptive market, secures energy and labour interests, attracts Gulf investment, and deepens geopolitical engagement in a region critical to global trade and security, according to an article in India Narrative.
The free trade agreement (FTA) will reduce or remove customs duties on a wide range of products traded between India and Oman.
The 5 per cent customs duty on Indian exports such as iron and steel, electronics, textiles, plastics, automotive components, and machinery will be reduced to zero which will make these commodities more competitive. These sectors align closely with Make in India goals, offering scale expansion opportunities and job creation at home.
For small and medium enterprises (SMEs), tariff-free access can open lucrative Gulf markets without the pricing disadvantage they previously faced.
The CEPA is also expected to encourage Omani and broader Gulf capital inflows into Indian strategic infrastructure projects - ports, industrial corridors, and logistics hubs. India, in turn, can participate in Omani ventures such as the Duqm Port, enhancing maritime connectivity.
A sensitive point in talks was Oman's 'Omanisation' policy, which mandates private companies to hire a minimum quota of Omani nationals. India pushed for explicit carve-outs to safeguard its large expatriate workforce - over 480,000 Indians - ensuring they are not disproportionately affected by future policy shifts.
Oman is a reliable supplier of crude oil, LNG, and fertilisers. Tariff reductions on these imports will lower input costs for Indian refiners, power producers, and farmers. This adds stability to India's energy security strategy, reducing exposure to price shocks and supply disruptions.
Oman's location near the Strait of Hormuz, through which 20 per cent of global oil shipments transit, is of immense global strategic importance. Stronger trade and investment ties deepen trust and open doors for defence cooperation, maritime security initiatives, and coordinated infrastructure projects.
India's CEPA with Oman would strengthen the country's position as a preferred partner in the Gulf, where China is expanding its economic influence.
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