India-Oman CEPA Goes Live– Key Tariff Concessions, CAROTAR Rules, and Market Opportunities

The India-Oman CEPA is live as of June 1, 2026. The immediate result is a sweeping elimination of the baseline 5 percent import tariff on over US$3.6 billion worth of Indian goods alongside faster marketing authorizations for pharmaceutical products.

India and Oman have implemented their long-awaited Comprehensive Economic Partnership Agreement (CEPA) on June 1, 2026, marking a major advancement in bilateral economic cooperation. The trade agreement is expected to expand trade and investment flows, improve market access for businesses, and strengthen India’s strategic engagement with the Gulf region.

The two countries signed the CEPA on December 18, 2025, paving the way for greater commercial opportunities across a range of sectors. By reducing trade barriers and improving regulatory cooperation, the agreement enables businesses in both countries to expand their market presence and strengthen cross-border economic ties.

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The tariff schedule emphasizes duty-free access, with most liberalized products receiving a 0 percent tariff rate. For sensitive categories, India has retained preferential duty rates of 4 percent, 4.5 percent, 9 percent, 24 percent, and 27 percent, reflecting a calibrated approach to trade liberalization.

Understanding the India-Oman CEPA

CEPA pacts are broader than conventional free trade agreements (FTAs). While FTAs primarily focus on tariff reductions for goods, CEPAs typically cover a wider range of economic activities, including:

1. Trade in goods and services
2. Investment facilitation
3. Intellectual property protection
4. Customs procedures and trade facilitation measures
5. Dispute resolution mechanisms

On May 31, 2026, the central government released a gazette notification on the CEPA coming into effect. The notification states that certain products imported from Oman will attract lower customs duties than the standard rates prescribed under India’s Customs Tariff Act.

For some products, India will also provide reduced Agriculture Infrastructure and Development Cess (AIDC).

Specific goods listed under a Tariff Rate Quota (TRQ) system can be imported at concessional duty rates up to a specified annual quantity. Once imports exceed the quota limit, the normal tariff rates will apply.

It must be noted that importers in India can claim these preferential duty benefits only if they demonstrate that the goods are genuinely originating from Oman. To do so, they must comply with India’s Rules of Origin requirements under the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR), and provide the necessary supporting documentation to customs authorities.

India-Oman trade relationship at a glance

Economic ties between India and Oman have continued to strengthen in recent years. Bilateral merchandise trade reached US$11.18 billion in FY 2025-26, compared to US$10.61 billion in FY 2024-25.

Source: Tradestat, Department of Commerce, Ministry of Commerce and Industry, GoI

The latest trade data indicates India’s growing reliance on imports from Oman, particularly in energy and industrial inputs. At the same time, several Indian export categories have recorded notable growth. In FY 2025–26, India’s exports of ships, boats, and floating structures to Oman increased by more than 1600 percent compared to the previous fiscal year.

Source: Tradestat, Department of Commerce, Ministry of Commerce and Industry, GoI

On the import side, Oman’s exports to India continue to be dominated by mineral fuels and oils, fertilizers, chemicals, and other industrial raw materials.

Source: Tradestat, Department of Commerce, Ministry of Commerce and Industry, GoI

Services trade between India and Oman

Services trade has also expanded steadily. India’s services exports to Oman increased from US$397 million in 2020 to US$665 million in 2024, driven largely by telecommunications, information technology, transport, and travel-related services. During the same period, India’s services imports from Oman nearly doubled, rising from US$101 million to US$197.7 million.

Immediate tariff elimination for importers from June 1, 2026

Under the agreement, Oman will provide duty-free treatment on 98.08 percent of its tariff lines, covering approximately 99.38 percent of bilateral trade value based on historical trade data.

All tariff concessions become effective immediately upon implementation. This marks an improvement from the existing Most Favored Nation (MFN) framework, under which only a limited portion of Indian exports entered Oman without customs duties.

The agreement removes the prevailing 5 percent import duty on a substantial volume of Indian exports, improving the price competitiveness of Indian products in the Omani market.

Market access gains and sectoral opportunities under the India–Oman CEPA

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The trade pact enhances market access for Indian exporters by eliminating or reducing tariffs across a wide range of products. The agreement is expected to improve the competitiveness of Indian goods in Oman, create new opportunities across manufacturing and services sectors, and strengthen bilateral trade flows while preserving safeguards for sensitive domestic industries.

Export opportunities across key sectors

The agreement is expected to generate immediate opportunities for a broad range of export-oriented industries, particularly those with strong manufacturing and employment linkages.

Major beneficiary sectors include:

1. Textiles and apparel
2. Agricultural and processed food products
3. Transport equipment
4. Precision instruments
5. Gems and jewelry
6. Food processing industries

The CEPA also creates growth opportunities for exporters in:

1. Chemicals and petrochemicals
2. Machinery and industrial equipment
3. Automobiles and auto components
4. Plastics and rubber products
5. Base metals and mineral products
6. Glass and ceramic products
7. Paper and paper-based products

Safeguards for sensitive domestic industries

While expanding market access commitments, India has adopted a calibrated liberalization strategy to safeguard sectors considered sensitive from a domestic economic and employment perspective.

Exclusion list

India has excluded several tariff lines from its tariff liberalization commitments under the CEPA. These exclusions are intended to protect strategically important sectors and preserve domestic manufacturing competitiveness.

Protected categories include transport equipment, selected chemical products, cereals and agricultural commodities, fruits and vegetables, coffee, tea, and spices and animal-origin products.

Protection for manufacturing and agricultural sectors

India has also retained tariff protection for several key manufacturing industries, including the following:

• Rubber and rubber products
• Leather goods
• Textiles and footwear
• Petroleum-based products
• Mineral-based industries

In agriculture, sensitive segments such as dairy products, meat, edible oils, sugar, and oilseeds remain outside the scope of tariff concessions.

Preferential treatment for India’s pharma products

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Under the India-Oman CEPA, pharmaceutical products exported from India to Oman generally receive duty-free (0 percent) market access, replacing the earlier MFN tariff rates that could go up to 5 percent on several products. The agreement specifically provides binding zero-duty access for key finished pharmaceutical products, vaccines, and selected active pharmaceutical ingredients (APIs).

Strengthening India’s Gulf trade strategy in 2026

The CEPA further deepens India’s economic engagement with the Gulf Cooperation Council (GCC) region, complementing the India-UAE trade agreement implemented in 2022.

India is also preparing to initiate trade negotiations with Qatar and has already established a framework for broader trade discussions with the GCC bloc, comprising Oman, the UAE, Saudi Arabia, Qatar, Kuwait, and Bahrain.

CLICK HERE: Why the Middle East is Emerging as a Top Destination for Indian Outbound Investment

Oman as a strategic gateway for Indian businesses

Beyond trade, Oman holds geopolitical importance due to its proximity to the Strait of Hormuz, one of the world’s most critical maritime energy corridors.

Oman serves as an important gateway for Indian businesses seeking access to wider Middle Eastern and African markets, making the CEPA strategically relevant for exporters, investors, and service providers.

Key takeaway for businesses and investors

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The India-Oman CEPA represents a much-awaited expansion of bilateral economic integration, offering immediate tariff advantages for Indian exporters, improved mobility for service professionals, and enhanced opportunities across manufacturing, agriculture, pharmaceuticals, and services. At the same time, India’s retention of safeguards for sensitive sectors reflects a balanced approach to trade liberalization.

For businesses looking to expand their presence in the Gulf region, Oman is likely to emerge as an increasingly important market and strategic entry point into the broader Middle East and Africa.

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