India, Oman sign Comprehensive Economic Partnership Agreement; to discuss social security pact

India's Commerce and Industry Minister Piyush Goyal and Oman’s Minister of Commerce, Industry & Investment Promotion Qais bin Mohammed Al Yousef signed a Comprehensive Economic Partnership Agreement (CEPA) in presence of India's Prime Minister Narendra Modi and Oman's Sultan Haitham bin Tarik on Thursday, December 18.

India's Commerce Ministry described the agreement as an export opportunity for India’s Labour-Intensive Sectors like textiles, leather, footwear, gems & jewellery, engineering products, plastics, furniture, agricultural products, pharmaceuticals, medical devices and automobiles.

Bilateral trade between the two countries stands at over $10 billion currently, with strong potential for expansion under the CEPA framework.

Nearly 7 lakh Indian nationals reside in Oman, including Indian merchant families with a presence of over 200–300 years and annual remittances of around $2 billion. Additionally, over 6,000 Indian establishments operate across sectors in the West Asian country.

This is India’s second free trade agreement signed in the past six months, following the pact with the United Kingdom, reflecting New Delhi’s strategy of deepening trade ties with developed economies that do not directly compete with India’s labour-intensive sectors while expanding market access for domestic businesses.

Under the agreement, Oman will provide zero-duty market access on 98.08% of its tariff lines, covering 99.38% of India’s exports to the country. This includes full tariff elimination for all major labour-intensive sectors, such as gems and jewellery, textiles, leather, footwear, sports goods, plastics, furniture, agricultural products, engineering goods, pharmaceuticals, medical devices and automobiles. Of these, 97.96% of tariff lines will see immediate tariff elimination, offering swift gains for Indian exporters.

India will liberalise tariffs on 77.79% of its total tariff lines (12,556 lines), accounting for 94.81% of imports from Oman by value. For products that are of export interest to Oman but considered sensitive for India, access will largely be provided through tariff-rate quotas (TRQs).

To safeguard domestic interests, India has kept several sensitive items in the exclusion list without offering concessions. Notably, agricultural products such as dairy, tea, coffee, rubber and tobacco, as well as gold and silver bullion, jewellery, and certain labour-intensive goods including footwear and sports goods, along with scrap of several base metals.

With India accounting for just 5.31% of Oman’s global services imports, estimated at $12.52 billion, the Commerce Ministry has flagged significant untapped potential for Indian service providers. Sectors such as computer-related services, business and professional services, audio-visual services, research and development, education, and healthcare have been identified as key areas that could drive high-value job creation and deepen commercial engagement between the two countries.

For the first time, Oman has made far-reaching market access commitments in services. These include raising the quota for intra-corporate transferees from 20% to 50%, extending the permitted stay for contractual service suppliers from 90 days to two years, with the option of a further two-year extension.

The agreement also provides more liberal entry and stay conditions for skilled professionals in areas such as accountancy, taxation, architecture, medical and allied services, aimed at enabling smoother cross-border professional mobility.

The CEPA allows 100% foreign direct investment by Indian companies in major services sectors in Oman through commercial presence. Both sides have also agreed to hold future discussions on social security coordination once Oman implements its contributory social security system, a move intended to facilitate labour mobility and strengthen worker protection.

In another first, Oman’s commitment on traditional medicine spans all modes of supply, opening up new opportunities for India’s AYUSH and wellness sectors.

The agreement also includes provisions to address non-tariff barriers that often persist even after tariff reductions and restrict effective market access. Notably, this is the first bilateral trade agreement Oman has signed with any country since its FTA with the United States in 2006.