India-Oman FTA: Securing a Gulf Gateway Outside Hormuz

The India–Oman Comprehensive Economic Partnership Agreement, signed on December 18, 2025, comes into force today, becoming India’s fifth free trade agreement to be implemented in the past five years and its 15th overall.

Oman has a population of 5.5 million and a GDP of about $110 billion and hence trade gains to India will remain modest. The importance of the agreement lies in Oman’s location.

Unlike most Gulf countries, which rely on shipping through the Strait of Hormuz, much of Oman’s coastline is located outside the Strait, directly on the Arabian Sea and the Gulf of Oman. This allows major ports such as Port of Salalah and Port of Duqm to remain accessible even when traffic through the Strait is disrupted. As a result, Oman can continue serving as a reliable trade and energy gateway during periods of conflict or instability in the Gulf.

The ongoing Gulf conflict has clearly demonstrated this advantage. India’s imports from major Gulf economies fell sharply from about $15 billion in April 2025 to $9.8 billion in April 2026, while India’s exports to the region dropped from $4.4 billion to $2.7 billion. Oman was the notable exception.

India’s imports from Oman surged by 246.4%, rising from $430 million to nearly $1.5 billion, driven by higher purchases of crude oil and urea. Meanwhile, India’s exports to Oman declined by only 10.3%. The experience shows that Oman can act as a dependable alternative trade and energy gateway for India when the Strait of Hormuz becomes risky or congested.

In that sense, the CEPA is not just a trade agreement, it is also an investment in India’s long-term energy and economic security.

India’s Gains

Oman has granted immediate zero-duty access on about 98% of its tariff lines, covering roughly 99% of India’s exports by value.

Indian exports to Oman totaled about $4 billion in fiscal 2026, led by refined petroleum products such as petrol ($781 million) and naphtha ($746 million), followed by calcined alumina ($277 million), iron and steel products ($230 million), machinery ($178 million), and rice ($167 million).

Although more than 80% of Indian exports already entered Oman at relatively low average tariffs of around 5%, duties on certain products reached as high as 100%.

Their elimination is expected to improve the competitiveness of Indian goods in the Omani market, though export growth will inevitably be constrained by the country’s relatively small population and market size.

Oman’s Gains

Oman’s gains are concentrated in sectors where it is already a major supplier to India—energy, fertilizers, and industrial raw materials.

Under the agreement, India will eliminate or reduce tariffs on about 78% of its tariff lines.

India imported $7.2 billion worth of goods from Oman in fiscal 2026, dominated by crude oil ($1.6 billion), liquefied natural gas ($1.2 billion), and fertilizers ($843 million). Oman is also an important source of industrial feedstocks, supplying methanol worth $465 million and ammonia worth $424 million.

The CEPA therefore strengthens a relationship that is as much about securing reliable supplies of energy and industrial inputs as it is about expanding bilateral trade.