The India-Oman Complete Financial Partnership Settlement (CEPA), which was signed on December 18, 2025, throughout Indian Prime Minister Narendra Modi’s go to to Muscat, got here into impact on June 1.
India has related agreements with a number of different international locations, together with within the Gulf area, such because the United Arab Emirates (UAE), for instance. The CEPA with Oman, nonetheless, is especially worthwhile to India. Current developments underscore its significance.
The India-Oman CEPA has kicked into impact at a essential time for the Indian financial system. India imports over 88 p.c and 50 p.c of its crude oil and gasoline wants, respectively. Gulf international locations are an vital supply on this regard; India depends closely on the area for crude oil, LNG, and fertilizers, with two-thirds of this provide coming from Qatar, the UAE and Oman.
India’s commerce with the Gulf has been closely impacted by the Strait of Hormuz disaster since March this 12 months. Imports from the Gulf dropped from round $15 billion in April 2025 to $9.8 billion in April 2026. Likewise, Indian exports to the area declined from $4.4 billion to $2.7 billion on this interval.
Amid this upheaval in India’s commerce with the Gulf area, Oman emerged as a lifesaver. The numbers communicate for themselves. Commerce with Oman has boomed. Imports from Oman grew from $430 million in April 2025 to just about $1.5 billion in April 2026 — a whopping 246.4 p.c — pushed by India’s stepped-up buy of crude oil and urea within the wake of the shortages because of the commerce disruption following the Hormuz disaster. Commerce with different Gulf international locations dropped sharply on this interval.
Oman’s location makes it a extremely worthwhile accomplice for India.
Situated alongside the southeastern coast of the Arabian Peninsula, Oman lies on the intersection of the Arabian Sea, the Sea of Oman, and the Arabian Gulf. Importantly, Oman’s Musandam peninsula, situated on the north of the nation, reaches into the strategic Strait of Hormuz. Oman thus shares the doorway to the Hormuz Strait with Iran on the opposite aspect.
Oman’s worth as a commerce accomplice amid the Strait of Hormuz disaster was boosted by one other function of its geographic location.
In contrast to different Gulf international locations, a lot of Oman’s shoreline lies outdoors the Strait of Hormuz. As Ajay Srivastava, founding father of the International Commerce Analysis Initiative, identified, since Oman’s main ports — the Port of Salalah and Port of Duqm — lie outdoors the Strait of Hormuz, they “stay accessible even when site visitors by means of the Strait is disrupted. In consequence, Oman can proceed serving as a dependable commerce and vitality gateway during times of battle or instability within the Gulf.”
This is the reason India’s commerce with Oman surged as assaults and closures of the Strait of Hormuz drove down India’s commerce with different Gulf international locations.
“[This] expertise exhibits that Oman can act as a reliable different commerce and vitality gateway for India when the Strait of Hormuz turns into dangerous or congested,” Srivastava stated.
With vessels plying the Strait of Hormuz being attacked and commerce through this waterway roiled in uncertainty, international locations are realizing the worth of Oman’s shoreline outdoors Hormuz. With its CEPA with Oman now kicking into impact as of June 1, India is well-positioned to maximise advantages.
The India-Oman CEPA grants India one hundred pc duty-free entry throughout 98.08 p.c of tariff traces, overlaying 99.38 p.c of export worth. Pre-CEPA, solely 15 p.c of Indian items entered Oman duty-free. CEPA opens export alternatives for India throughout engineering items, prescribed drugs, agriculture and processed meals, marine merchandise, textiles, chemical compounds, electronics, plastics, and gems and jewellery. A number of of those commodities are produced in labor-intensive and value-added sectors, and contain micro, small and medium enterprises (MSMEs).
The settlement is anticipated to spice up bilateral commerce, generate employment, strengthen provide chains, and help deeper and extra sustained financial engagement between India and Oman.
India and Oman have loved shut commerce, cultural and people-to-people relations for millennia. Unbiased India established diplomatic relations with Oman in 1955. Indian analysts recall that “many years in the past, when the [Gulf] area was nonetheless ambivalent in the direction of India and comfortable and supportive of Pakistan, it was Oman which stored its doorways open to India.” Ties have strengthened over the many years, fueled largely by India’s oil imports from Oman but in addition by rising protection cooperation in current many years. In November 2008, India and Oman turned strategic companions. Protection cooperation, particularly between their navies, has grown considerably.
CEPA will take the bilateral relationship additional. The settlement will improve the competitiveness of Indian items within the Omani market. Indian merchants shall be seeking to money in on this benefit. Nevertheless, they’d do nicely to mood their expectations. Oman has a small inhabitants of nearly 5.68 million folks. Its market dimension is small, which signifies that the quantity of Indian items that may be absorbed by the Omani market is proscribed.
That is the place one more side of Oman’s geography may come to the rescue of Indian merchants. The nation shares land borders with Saudi Arabia to the west, the UAE to the northwest and Yemen to the southwest. Cargo offloaded from Indian ships on the Omani ports of Salalah and Duqm, could possibly be trucked throughout to Saudi Arabia, Yemen, the UAE and past, bypassing the Strait of Hormuz.
