India-Oman CEPA: How Oman Bypasses Hormuz to Keep India's Trade Flowing

The Comprehensive Economic Partnership Agreement (CEPA) between India and Oman came into effect on June 1, marking a significant step in strengthening economic ties between the two countries. The agreement, signed during Prime Minister Narendra Modi’s visit to Muscat in December last year, provides expanded market access and tariff benefits for a wide range of Indian exports. Union Commerce and Industry Minister Piyush Goyal described the pact as a milestone that will support exporters, attract investments, create jobs, and open new opportunities for students, artisans, women, farmers, fishermen, and micro, small, and medium enterprises.

The trade agreement has gained added significance amid the ongoing conflict involving the United States and Iran, which has disrupted shipping activity through the Strait of Hormuz. The narrow waterway is one of the world’s most important energy routes, handling roughly one-fifth of global daily oil consumption and about a quarter of seaborne oil trade. Disruptions in the region have affected the flow of oil and gas supplies from Gulf nations to India, contributing to increased energy prices and heightened concerns over supply-chain stability.

Experts point to Oman’s strategic geographical position as a key advantage under the new arrangement. Unlike several Gulf countries whose exports depend heavily on passage through the Strait of Hormuz, much of Oman’s coastline lies outside the waterway along the Arabian Sea and the Gulf of Oman. According to trade analysts, major Omani ports such as Salalah and Duqm can continue operating even during periods of regional instability, allowing Oman to serve as a dependable gateway for trade and energy supplies.

Also Read: UAE Official Warns: Only 50% Chance of US-Iran Deal; Blames Tehran for 'Over-Negotiation' Pattern

Recent trade data highlights Oman’s growing importance to India during the ongoing regional uncertainty. While India’s imports and exports with several Gulf economies declined sharply over the past year, trade with Oman showed resilience. Imports from Oman increased substantially, driven by higher purchases of crude oil and urea, while Indian exports to the country experienced only a modest decline. Analysts say these trends demonstrate Oman’s ability to provide a stable alternative route when traditional shipping corridors face disruptions.

Under the CEPA, Oman will provide zero-duty access on more than 98 percent of its tariff lines, covering nearly all Indian exports to the country. Labor-intensive sectors such as textiles, leather goods, footwear, gems and jewelry, engineering products, pharmaceuticals, medical devices, agricultural products, furniture, plastics, and automobiles are expected to benefit from the removal of tariffs. Although many Indian products already entered Oman at relatively low duty rates, the elimination of higher tariffs on selected goods is expected to improve competitiveness and support export growth.

In return, Oman is expected to strengthen its position in supplying energy products, fertilizers, and industrial raw materials to India. Indian tariff reductions on a large share of Omani exports are likely to deepen bilateral trade and investment ties. With Oman’s economy valued at approximately USD 110 billion and its strategic access to global shipping routes, policymakers and trade experts view the agreement as an important step toward enhancing economic cooperation while improving India’s resilience against disruptions in critical maritime corridors.

Also Read: Pakistan Enlists China's Diplomacy to Broker US-Iran Deal; Sharif Heads to Beijing