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India-Oman Trade Deal: How a 100% Tariff Cut Could Boost Exports

The new India-Oman trade deal is poised to give a major boost to Indian exports by cutting high tariffs. Currently, some Indian goods face duties as steep as 100% when entering Oman. This agreement will make products like machinery, ceramics, and pharmaceuticals much more competitive. Beyond just trade, it deepens India's strategic and investment ties in a key Gulf region partner.

Key Points: India Oman CEPA to Boost Exports as GTRI Notes High Tariffs

  • CEPA aims to eliminate Oman's high tariffs, which currently reach 100% on select goods like tobacco and alcohol
  • India's top exports to Oman include naphtha, petrol, and machinery, totaling $4.1 billion annually
  • Agreement follows India-UAE FTA template, offering fast-track approvals for Indian pharmaceutical products
  • Pact strengthens India's strategic footprint with over $7.5 billion in existing investments in Oman's free zones
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India-Oman FTA likely to boost industrial exports as current tariffs range up to 100%: GTRI

India-Oman FTA set to slash tariffs up to 100%, boosting industrial exports. GTRI report highlights key sectors like machinery, ceramics, and pharmaceuticals.

"Tariff elimination under the CEPA is expected to improve competitiveness for Indian industrial exports, though sustained growth will depend on quality upgrades and product differentiation in Oman's relatively small market. - Global Trade Research Initiative (GTRI)"

New Delhi, December 18

The proposed India-Oman Comprehensive Economic Partnership Agreement (CEPA) is expected to significantly boost India's industrial exports, as import duties in Oman currently range from zero to as high as 100 per cent on select products, according to a report by the Global Trade Research Initiative (GTRI).

The report noted that at present, over 80 per cent of Indian goods enter Oman at an average tariff of around 5 per cent. However, duties vary widely across products, with very high tariffs imposed on items such as certain meats, alcohol and tobacco.

GTRI said that the elimination or reduction of these tariffs under the CEPA is likely to improve the competitiveness of Indian industrial exports in the Omani market.

It stated, "Tariff elimination under the CEPA is expected to improve competitiveness for Indian industrial exports, though sustained growth will depend on quality upgrades and product differentiation in Oman's relatively small market."

India and Oman are set to sign the CEPA on Thursday, covering goods, services and investment. While the agreement may be implemented after a few months, it is expected to play a key role in strengthening bilateral economic ties. The pact aims to cut tariffs across a wide range of products, helping boost India's exports to Oman, which currently stand at USD 4.1 billion.

For India, the main gains lie in merchandise exports. India's exports to Oman stood at USD 4.1 billion in FY2025, led by naphtha (USD 747.6 million) and petrol (USD 561 million), alongside calcined alumina (USD 313 million), machinery (USD 231 million), aircraft (USD 165 million), rice (USD 182 million), iron and steel articles (USD 120 million), beauty and personal care products (USD 128.6 million) and ceramic products (USD 79.9 million).

The agreement will also reinforce Oman's position as a key energy supplier to India. Energy and fertiliser imports worth USD 6.6 billion, including crude oil, LNG and chemicals, are expected to benefit from India's tariff commitments under the CEPA.

According to the report, the India-Oman CEPA broadly follows the template of India's UAE Free Trade Agreement, with a focus on reducing regulatory barriers. This includes the possibility of fast-track approvals for Indian pharmaceutical products, which could help Indian companies expand their presence in Oman.

While Oman's relatively small domestic market may limit the scale of trade expansion, the CEPA is expected to strengthen India's strategic and investment footprint in the Gulf region. The two countries already have more than 6,000 joint ventures in place.

The agreement aims to substantially reduce or eliminate tariffs on a wide range of goods, liberalise services trade and facilitate investment flows. Bilateral trade between India and Oman stood at about USD 10.5 billion in 2024-25.

The report highlighted that beyond trade, the CEPA carries strong strategic importance. With Indian investments exceeding USD 7.5 billion, especially in Oman's Sohar and Salalah free zones, the agreement represents a significant step in strengthening India's long-term economic and strategic presence in the Middle East.

- ANI

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Reader Comments

P
Priya S
Good step, but the report rightly points out Oman's market is small. The real benefit is the strategic footprint and the template it sets. Fast-track for pharma is a big deal! Hope our MSMEs in engineering goods can really leverage this.
R
Rohit P
$4.1 billion in exports can grow significantly. The beauty and personal care sector at $128 million shows there's a demand for 'Made in India' consumer goods there. We need more branding to compete with international brands in Oman.
S
Sarah B
While the economic logic is sound, I hope the environmental impact of boosting naphtha and petrol exports is considered. Long-term growth should be sustainable. The investment in free zones is the more interesting part of this deal.
V
Vikram M
Bahut accha! Our rice exports will get a further boost. The Gulf region is a major market for Indian basmati. With over 6000 JVs already, this CEPA will formalize and deepen a relationship that's been strong for decades. More jobs back home 🙏
K
Karthik V
The focus on quality upgrades mentioned in the report is key. We can't just rely on tariff elimination. Indian products need to match global standards in finish and reliability to command premium value in any market, even a smaller one like Oman.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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