India and Oman’s Comprehensive Economic Partnership Agreement (CEPA) has come into force at a time when the US‑Iran war has severely disrupted shipping through the Strait of Hormuz, NDTV reported.

This pact is being seen as a strategic breakthrough, offering India an alternative trade and energy route that bypasses the world’s most critical maritime chokepoint.

Signed in December during Prime Minister Narendra Modi’s visit to Muscat, the CEPA provides zero‑duty access to a wide range of Indian labour‑intensive exports.

Union Commerce and Industry Minister Piyush Goyal described the agreement as a defining milestone in India’s mission to create global pathways to prosperity, benefiting students, artisans, women, farmers, fishermen and MSMEs by opening new markets, boosting exports, attracting investments and accelerating job creation.

The timing of the deal is crucial. The Strait of Hormuz, which handles about one‑fifth of global daily oil consumption and a quarter of global seaborne oil trade, has been paralysed by the ongoing conflict. 

Iran’s chokehold has disrupted flows of oil and gas from Saudi Arabia, Qatar and the UAE to India, driving up crude prices. Oman’s geographical advantage lies in its coastline outside the Strait, directly on the Arabian Sea and Gulf of Oman.

Ports such as Salalah and Duqm remain accessible even when Hormuz traffic is blocked, allowing Oman to serve as a reliable trade and energy gateway during instability.

India’s imports from major Gulf economies fell sharply from USD 15 billion in April 2025 to USD 9.8 billion in April 2026, while exports dropped from USD 4.4 billion to USD 2.7 billion. Oman was the exception, with imports surging by 246.4 per cent from USD 430 million to nearly USD 1.5 billion, driven by crude oil and urea purchases. Exports to Oman declined only marginally by 10.3 per cent, underscoring its resilience as a partner.

Under the CEPA, Oman is offering zero‑duty access on 98.08 per cent of its tariff lines, covering 99.38 per cent of India’s exports. This is a significant jump from the pre‑CEPA system, which allowed zero‑duty access for just 15.3 per cent of exports.

Labour‑intensive sectors such as gems and jewellery, textiles, leather, footwear, sports goods, plastics, furniture, agricultural products, engineering products, pharmaceuticals, medical devices and automobiles will benefit from full tariff elimination.

Indian exports to Oman reached USD 3.64 billion in fiscal 2026, led by refined petroleum products such as petrol (USD 781 million) and naphtha (USD 746 million), followed by calcined alumina (USD 277 million), iron and steel products (USD 230 million), machinery (USD 178 million) and rice (USD 167 million).

While more than 80 per cent of exports already entered Oman at relatively low tariffs of around 5 per cent, duties on certain products were as high as 100 per cent. Their removal will improve competitiveness, though growth will be limited by Oman’s relatively small population of 5.5 million and GDP of USD 110 billion.

Oman’s gains are concentrated in sectors where it is already a major supplier to India, including energy, fertilisers and industrial raw materials. India will eliminate or reduce tariffs on about 78 per cent of its tariff lines.

In fiscal 2026, India imported USD 7.2 billion worth of goods from Oman, dominated by crude oil (USD 1.6 billion), liquefied natural gas (USD 1.2 billion) and fertilisers (USD 843 million). Oman also supplied methanol worth USD 465 million and ammonia worth USD 424 million, reinforcing its role as a key provider of industrial feedstocks.

The CEPA thus represents more than a trade agreement; it is a strategic lifeline for India during a time of regional instability. By leveraging Oman’s unique geography and strengthening bilateral economic ties, India has secured an alternative gateway to the Gulf that reduces dependence on the Strait of Hormuz and enhances energy security.

Agencies