India–Oman CEPA: Zero-Duty Access for 99% of Indian Exports
Table of Contents
Source: The Hindu
Relevance:
GS Paper II – India’s Foreign Policy, Bilateral Relations, Gulf Cooperation Council (GCC)
GS Paper III – International Trade, Services, Employment, MSMEs, Investment
Important Key Concepts for Prelims and Mains:
For Prelims:
- Comprehensive Economic Partnership Agreement (CEPA), Tariff lines, Mode 4, Labour-intensive sectors, GCC
For Mains:
- Trade liberalisation, Services mobility, MSME competitiveness, Export diversification, Strategic economic partnership
Why in News?
- India and Oman signed a Comprehensive Economic Partnership Agreement (CEPA) .
- Under the agreement:
- Oman will provide duty-free access on 98.08% of its tariff lines, covering 99.38% of India’s exports by value.
- India will liberalise tariffs on 77.79% of its tariff lines, covering 94.81% of imports from Oman.
- The agreement was signed in the presence of Narendra Modi and Sultan Haitham bin Tarik.
What are the Core Features of the India–Oman CEPA?
- The CEPA provides near-universal market access for Indian exports to Oman.
- Immediate tariff elimination ensures quick and tangible benefits for Indian exporters.
- India has safeguarded domestic interests by excluding sensitive products, including:
- Dairy, tea, coffee, rubber, tobacco
- Gold and silver bullion and jewellery
- Footwear, sports goods
- Scrap of several base metals
- The agreement extends beyond merchandise trade to include:
- Services
- Investment
- Mobility of professionals
How Does the Agreement Benefit Labour-Intensive Sectors?
- The agreement provides full tariff elimination for key labour-intensive sectors such as:
- Gems and jewellery
- Textiles and apparel
- Leather and footwear
- Sports goods
- Plastics and furniture
- Agricultural products
- Engineering goods
- Pharmaceuticals and medical devices
- Automobiles
- Expected outcomes include:
- Employment generation
- Strengthening of MSMEs, artisans and women-led enterprises
- Improved competitiveness of Indian exports
- According to Piyush Goyal, the agreement is balanced and ambitious, aimed at boosting trade, strengthening supply chains, and deepening long-term economic partnership.
What are the Provisions for Services and Worker Mobility?
Enhanced Mobility Framework
- For the first time, Oman has offered wide-ranging Mode 4 commitments:
- Intra-Corporate Transferees quota increased from 20% to 50%
- Duration of stay for Contractual Service Suppliers extended:
- From 90 days to two years
- With the possibility of a further two-year extension
- More liberal entry and stay conditions are provided for professionals in:
- Accountancy
- Taxation
- Architecture
- Medical and allied services
Boost to Services Sector
- Oman has offered a comprehensive and forward-looking services package covering:
- Computer-related services
- Business and professional services
- Audio-visual services
- Research and development
- Education and health services
- The agreement allows 100% Foreign Direct Investment by Indian companies in major services sectors in Oman.
- Both countries have agreed to hold future discussions on social security coordination.
- Capital: Muscat
- Region: West Asia / Middle East
- Political grouping: Member of the Gulf Cooperation Council (GCC)
- Status: Oldest independent state in the Arab world
- Land borders:
- Yemen (South-West)
- Saudi Arabia (West)
- United Arab Emirates (North-West)
- Water bodies:
- Arabian Sea (South & East)
- Gulf of Oman (North)
- Rub al-Khali (Empty Quarter): One of the world’s largest sand deserts
- Hajar Mountains: Northern Oman
- Dhofar Range: Southern Oman (monsoon-influenced region)
- Petroleum
- Natural Gas
- Copper
- Limestone
- Asbestos
What is the Current India–Oman Trade Profile?
Trade Volume (2024–25)
- India’s exports to Oman:
- $4.06 billion, accounting for 0.93% of India’s total exports
- India’s imports from Oman:
- $6.5 billion, accounting for 0.91% of India’s total imports
Export Composition
- Petroleum products – 35.1%
- Processed minerals – 9.2%
- Aircraft and spacecraft parts – 4.3%
- Cosmetics and toiletries – 3.6%
- Basmati rice – 3.6%
Import Composition
- Crude oil and petroleum gases – 38%
- Mineral or chemical fertilisers – 16.3%
- Acyclic alcohols – 6.6%
- Ammonia – 5.8%
Why is the CEPA Strategically Significant?
- It is Oman’s first bilateral trade agreement since 2006.
- It is India’s second CEPA with a GCC country, after the UAE (2022).
- The agreement positions Oman as a gateway for India to:
- The GCC region
- Eastern Europe
- Central Asia
- Africa
- The CEPA is expected to infuse new momentum into bilateral trade, investment and services cooperation.
Conclusion
The India–Oman CEPA represents a comprehensive and forward-looking trade agreement that combines near-total tariff elimination with meaningful commitments in services and professional mobility. By protecting sensitive domestic sectors while expanding opportunities for labour-intensive industries and service providers, the agreement strengthens India’s economic engagement with the Gulf region and supports employment generation, MSME growth and long-term strategic partnership.
UPSC PYQ
Which of the following is not a member of the Gulf Cooperation Council (GCC)? (2016)
(a) Iran
(b) Saudi Arabia
(c) Oman
(d) Kuwait
Answer: (a)
Explanation
The Gulf Cooperation Council (GCC) was established in 1981 as a regional political and economic alliance of six Arab Gulf countries:
- Saudi Arabia
- Oman
- Kuwait
- United Arab Emirates
- Qatar
- Bahrain
CARE MCQ
Q. Exercise Naseem Al Bahr, recently seen in news, is best described as:
(a) A multilateral naval exercise involving India and Gulf Cooperation Council countries
(b) A bilateral naval exercise between India and Oman focusing on maritime interoperability
(c) A joint air–naval exercise between India and Oman conducted only in the Arabian Sea
(d) A coastal security exercise conducted under the Indian Ocean Rim AssociationCorrect Answer: (b) A bilateral naval exercise between India and Oman focusing on maritime interoperability
Explanation:
- Naseem Al Bahr is a bilateral naval exercise conducted between India and Oman.
- It was initiated in 1993, symbolising the long-term strategic maritime partnership between the two countries.
- Oman is the first Gulf Cooperation Council (GCC) country to conduct bilateral naval exercises with India.
