How the India-Oman FTA will redefine a strategic partnership

When Indian Prime Minister Narendra Modi touches down in Muscat next week, the world will witness more than another state visit between two friendly nations. What he is poised to sign, the India-Oman Free Trade Agreement (FTA), formally known as a Comprehensive Economic Partnership Agreement (CEPA), marks a watershed in the trajectory of India’s economic diplomacy and the Sultanate of Oman’s enduring role as a gateway between East and West. Far from being a routine commercial pact, the FTA embodies decades of deepening trust, shared aspirations, and a concerted push toward sustainable, diversified growth for both countries.

India and Oman share centuries of historical links grounded in commerce, culture, and maritime engagement. Most recently, as a mark of special friendship, India extended an invitation to Oman to participate in the G20 Summit and meetings as a guest country during India’s Presidency in 2023. Oman also participated in 150+ meetings of the Working Groups, and 9 Omani Ministers travelled to India to participate in G20 Ministerial Meetings.

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Today, these connections are reflected in robust economic activity: bilateral trade between the two nations reached approximately $10.61 billion in the fiscal year 2024–25, an 18.6 percent increase year-on-year, underscoring the vibrancy of the economic relationship. India exported about $4.07 billion worth of goods to Oman while importing $6.55 billion in return. 

The FTA could reinvigorate India’s second-largest export category to Oman - engineering goods -which recently felt the strain of global headwinds.  

Oman’s significance extends beyond mere numbers. India is among Oman’s top trading partners, ranking as the fourth-largest source of Oman’s imports and one of the principal destinations for its exports.

More than 6,000 India–Oman joint ventures, with capital commitments running into several billion US dollars over time, testify to the depth of private sector engagement.

At the heart of this strategic embrace lies a profound demographic link:  Indians residing in Oman  form one of the largest expatriate communities in the Sultanate. Their presence is more than symbolic. It fuels remittances, cross-cultural exchange, and economic and cultural vibrancy that transcend formal trade statistics. Indian talent in sectors ranging from healthcare to engineering and information technology plays a central role in Oman’s diversification drive and burgeoning services economy.

Historically, many Indian products entered Oman subject to varying duties, even when the trading relationship was flourishing. The CEPA framework is designed to cut through these constraints, enhancing market access across key sectors while also easing regulatory hurdles that have traditionally hindered cross-border commerce. 

For India’s export portfolio, the implications are substantial. Engineering goods, pharmaceuticals, chemicals, textiles, and value-added agricultural products stand to gain from lowered barriers expanding reach into not just Oman’s markets but also leveraging its strategic position as a trans-regional hub. Conversely, Oman’s natural advantages, its petrochemical resources, logistics infrastructure, and access to critical maritime routes, offer Indian firms a staging ground for deeper penetration into Middle Eastern and African markets.

The FTA comes at a moment when global economic alignments are in flux. Nations are actively weaving regional partnerships that boost economic resilience, mitigate supply chain vulnerabilities, and reinforce strategic autonomy. In this context, India’s economic engagement with the Gulf, already underpinned by the India-UAE CEPA in force since 2022, is gaining fresh momentum through Muscat’s pact, offering a model for deeper collaboration across the Gulf Cooperation Council (GCC). 

Oman, for its part, is pursuing an ambitious economic transformation under Vision 2040, a national blueprint to diversify its economy beyond oil and gas. The FTA dovetails with this vision by encouraging foreign investment, supporting entrepreneurship, and promoting technology transfer.

As Prime Minister Modi prepares to formalize the FTA during his visit, the agreement stands to redefine the contours of India-Oman relations: economic, strategic, and cultural. It represents not just tariff concessions, but a mutual commitment to shared prosperity, to utilizing demographic strengths, and to building resilient pathways for growth.

The writer is a commentator on political and current affairs. He has previously served as the media adviser to the Jammu and Kashmir Chief Minister.