India and Oman Forge Strategic Trade Pact to Bolster Energy Security and Ties

India and Oman are set to sign a major new trade agreement. The pact will be finalized during Prime Minister Narendra Modi‘s official visit to Oman this week. This deal is a key part of India’s strategy to deepen economic partnerships in the Gulf region.

Negotiated since late 2023, the Comprehensive Economic Partnership Agreement (CEPA) covers goods, services, and investment. It is expected to take effect within months after domestic approval processes in both nations, according to official reports.

Following a Proven Blueprint for Gulf Engagement

The agreement closely follows the model India used for its successful trade pact with the United Arab Emirates. Analysts see this as India’s preferred framework for engaging with Gulf economies. According to a report by the Global Trade Research Initiative (GTRI), the pact is about anchoring long-term economic presence.

Bilateral trade between the nations was about $10.5 billion last fiscal year. India’s exports to Oman were valued at $4.1 billion. Key exports include petroleum products, machinery, and rice.

Most Indian goods already enter Oman with low tariffs. The new CEPA will eliminate remaining duties on many products. This should improve price competitiveness for Indian exporters in the Omani market.

However, experts caution that large export gains may be limited. Oman has a population of roughly five million. Sustained gains will require Indian companies to move up the value chain.

Focus on Stability and Strategic Gains Over Volume

The real value of the pact lies beyond simple trade numbers. For India, a primary benefit is enhanced energy security. Oman is a critical supplier of crude oil and liquefied natural gas.

India imported $6.6 billion worth of goods from Oman last year. These were dominated by energy products and fertilizers. The agreement will help stabilize these crucial supply chains.

The deal also seeks significant regulatory gains. A key focus is streamlining approvals for Indian pharmaceutical products. Provisions may fast-track drugs already approved by major regulators like the U.S. FDA.

The strategic dimension is substantial. Indian investments in Oman exceed $7.5 billion. There are over 6,000 India-Oman joint ventures. The CEPA strengthens this investment footprint and India’s geopolitical position in the Gulf.

This new India-Oman trade pact represents a strategic shift. It prioritizes secure supply chains and deep investment ties over dramatic trade expansion. The agreement solidifies a key partnership in a region vital to India’s energy and economic future.

Info at your fingertips

Q1: When will the India-Oman trade deal take effect?

The Comprehensive Economic Partnership Agreement (CEPA) is expected to be signed imminently. It will likely come into force within a few months after both countries complete their domestic ratification processes.

Q2: What are the main benefits for India?

The pact strengthens India’s energy security by securing supplies of crude oil and LNG from Oman. It also deepens investment ties and aims to streamline regulatory access for key sectors like pharmaceuticals.

Q3: Will this significantly increase India’s exports?

While tariffs will be eliminated, experts note Oman’s market size is limited. Sustained export growth will depend on Indian businesses offering higher-value goods, not just relying on tariff cuts.

Q4: How does this pact compare to India’s deal with the UAE?

It follows a similar template, signaling India’s preferred model for Gulf engagements. Both agreements focus on comprehensive economic partnership covering goods, services, and investment.

Q5: What does Oman gain from this agreement?

Oman consolidates its role as a key energy supplier to India. The pact also promises to attract more Indian investment into Omani free zones and joint ventures, boosting its economic diversification efforts.