India-Oman CEPA (Dec 2025): Middle Eastern Opportunities

Why the India-Oman CEPA Matters for Cross-Border Business

On December 18, 2025, India and Oman signed a Comprehensive Economic Partnership Agreement (CEPA) that fundamentally reshapes economic ties between the two nations. This is Oman's first bilateral trade agreement since 2006 and India's second CEPA with a Gulf Cooperation Council (GCC) member, following the India-UAE CEPA signed in 2022. The agreement was negotiated across multiple rounds between November 2023 and August 2025, covering trade in goods, trade in services, investment, rules of origin, trade remedies, and professional mobility.

Bilateral trade between India and Oman reached approximately USD 10.61 billion in FY 2024-25, with Oman exporting goods worth about USD 6.55 billion to India (primarily crude oil, LNG, and fertilizers) and importing approximately USD 4.06 billion from India. Oman ranks as India's 28th largest trading partner, while India emerged as Oman's fourth-largest source of non-oil imports and third-largest destination for non-oil exports in FY 2024-25.

For foreign companies operating in India or considering India market entry, the CEPA opens a dual opportunity: Indian subsidiaries can export to Oman at preferential tariff rates, and Omani companies can invest in India with greater policy predictability. Companies from third countries—particularly those in the Middle East, Europe, and Asia—can use India or Oman as a regional hub to access the other market under preferential terms, provided they meet the agreement's rules of origin requirements.

Tariff Concessions: What Changes for Exporters

Oman's Concessions to India

Oman has granted zero-duty access on 98.08% of its tariff lines, covering 99.38% of India's exports to Oman by value. This is one of the most generous tariff offers India has received from any Middle Eastern trading partner. The concessions are structured in three tiers:

• Immediate duty elimination on a significant share of originating goods upon entry into force of the agreement
• Phased elimination over 5-10 years on additional tariff lines, allowing Omani industries to adjust gradually
• Reduced tariff rates on remaining lines, where full elimination is not commercially feasible for either party

Full tariff elimination applies to sectors including gems and jewellery, textiles, leather, footwear, sports goods, plastics, furniture, agricultural products, engineering goods, pharmaceuticals, medical devices, and automobiles. For Indian exporters and foreign companies with Indian manufacturing operations, this creates significant cost advantages when selling into the Omani market.

India's Concessions to Oman

India has offered tariff liberalization on 77.79% of its total tariff lines, covering 94.81% of imports from Oman by value. Sensitive sectors are protected through exclusion lists and Tariff Rate Quotas (TRQs), covering agriculture, bullion and jewellery, select labour-intensive goods, and base metal scrap. This calibrated approach ensures that India's domestic industries in these sectors are not overwhelmed by sudden import surges.

Services Liberalization: 127 Sub-Sectors Open

The CEPA goes well beyond goods trade. Oman has committed to liberalization across 127 services sub-sectors—a significant opening for Indian service providers and foreign companies operating from India. Key sectors include:

• Computer and IT Related Services — Indian IT firms and foreign companies with Indian IT delivery centres gain improved market access in Oman
• Business and Professional Services — Accounting, taxation, management consulting, architecture, and engineering services
• Audio-visual Services — Media production, distribution, and digital content services
• Research and Development — Cross-border R&D collaboration with fewer barriers
• Education Services — Indian educational institutions and edtech companies can expand into Oman
• Health Services — Medical tourism, hospital management, and telemedicine

In a historic first, the CEPA includes the world's first comprehensive commitment on Traditional Medicine across all modes of supply. This opens new avenues for India's AYUSH (Ayurveda, Yoga, Unani, Siddha, and Homeopathy) and wellness sectors and promotes medical value travel between the two countries.

For foreign companies with Indian subsidiaries providing professional services, the CEPA provides a framework to extend those services to Oman with reduced regulatory friction. Companies registered in India as a private limited company can establish commercial presence in Oman under the CEPA's services chapter, using Oman as a gateway to the broader GCC market.

Professional Mobility: Mode 4 Commitments

One of the most significant aspects of the India-Oman CEPA is Oman's unprecedented Mode 4 commitments for professional mobility. For the first time, Oman has offered wide-ranging commitments covering multiple categories of business professionals:

Intra-Corporate Transferees (ICTs)

The quota for Intra-Corporate Transferees has been increased from 20% to 50%, and the stay period has been significantly extended. This means Indian companies—and foreign companies with Indian operations—can transfer managers, executives, and specialists from their Indian offices to Omani operations more easily. For companies using India as a regional talent hub, this is a material advantage.

Contractual Service Suppliers (CSS)

The stay period for Contractual Service Suppliers has been extended from 90 days to two years, with the possibility of further extension. This is transformative for Indian professional services firms—accountancy, taxation, architecture, medical practitioners, and allied sectors—that deploy professionals on project-based engagements in Oman.

Independent Professionals

Oman has liberalized entry and stay for independent professionals in specific sectors including accountancy, taxation, architecture, medical, and allied disciplines. This creates opportunities for individual practitioners and small firms to access the Omani market without necessarily establishing a commercial presence.

Companies considering deploying Indian employees to Oman should ensure compliance with both Indian FEMA regulations governing outward remittances and Oman's labour laws, including the Omanisation requirements that mandate certain percentages of Omani nationals in the workforce. Notably, Oman has confirmed that the CEPA does not affect its existing Omanisation policies.

Investment Provisions: 100% FDI in Major Sectors

The CEPA allows 100% Foreign Direct Investment by Indian companies in major services sectors in Oman through commercial presence (Mode 3). This enables Indian firms to establish wholly owned subsidiaries, joint ventures, or branch offices in Oman across permitted sectors, using Oman as a regional base for Middle Eastern operations.

For foreign companies considering a dual-presence strategy—operating in both India and Oman—the CEPA creates a preferential corridor. A UK company, for example, could establish an Indian subsidiary to manufacture goods, then export those goods to Oman at zero or reduced duty under the CEPA, while also establishing a services presence in Oman to serve the broader GCC market.

Key Investment Sectors in Oman

• Manufacturing — Oman's Duqm Special Economic Zone offers incentives including 30-year tax holidays, no minimum capital requirements, and 100% foreign ownership
• Logistics and Warehousing — Oman's strategic location at the mouth of the Persian Gulf makes it an ideal logistics hub for re-export to Africa and South Asia
• Food Processing — Growing demand for processed food in the GCC creates opportunities for Indian food companies to serve the regional market from Oman
• Infrastructure — Oman's Vision 2040 development plan includes massive infrastructure spending, opening opportunities for Indian construction and engineering firms

Indian companies investing outward into Oman must comply with RBI's Overseas Direct Investment (ODI) framework under FEMA. The automatic route permits ODI up to 400% of the Indian company's net worth in a financial year, without requiring prior RBI approval.

Rules of Origin: Qualifying for Preferential Treatment

For goods to receive preferential tariff treatment under the CEPA, they must qualify as originating goods under the agreement's rules of origin chapter. Understanding these rules is critical for foreign companies with manufacturing operations in India that plan to export to Oman.

Wholly Obtained Goods

Products entirely grown, harvested, extracted, or manufactured in India (or Oman) automatically qualify as originating goods. This covers agricultural products, minerals, and goods manufactured entirely from domestic inputs.

Substantially Transformed Goods

For goods that incorporate non-originating materials (imported components or raw materials from third countries), the rules of origin specify minimum value addition or change in tariff classification requirements that must be met for the finished product to qualify as Indian-origin. Foreign companies with assembly or processing operations in India should review their supply chains to determine whether their products meet these thresholds.

Companies should maintain detailed records of sourcing, manufacturing processes, and value addition to support origin claims. Incorrect origin declarations can result in loss of preferential tariff rates, customs penalties, and reputational damage. Our GST compliance services team can assist with customs documentation and origin certification.

Comparison: India-Oman CEPA vs India-UAE CEPA

With India now having CEPAs with both the UAE and Oman, businesses need to understand the comparative advantages of each agreement when planning their Middle East strategy:

While the UAE remains the larger trading partner, the Oman CEPA offers more generous services access and professional mobility terms. Companies serving the broader Middle East market may benefit from a dual-hub strategy, leveraging the UAE for volume trade and Oman for specialized services and professional deployments.

Practical Steps for Leveraging the India-Oman CEPA

For Indian Exporters and Foreign Companies with Indian Operations

1. Audit your product portfolio — Identify which goods qualify for preferential tariff treatment under the CEPA's rules of origin
2. Register with DGFT — Obtain a Certificate of Origin from India's Directorate General of Foreign Trade to claim preferential duty rates at Omani customs
3. Review pricing strategy — Factor in the tariff savings when pricing goods for the Omani market. Zero-duty access can make Indian goods significantly more competitive than those from non-CEPA countries
4. Explore services opportunities — If your Indian entity provides IT, consulting, or professional services, evaluate Oman's 127 liberalized sub-sectors for expansion
5. Assess Mode 4 benefits — If you deploy professionals to the Middle East, the expanded ICT quotas and extended CSS stays can reduce operational costs and visa-related friction

For Omani Companies Investing in India

1. Choose the right entity structure — Most Omani investors enter India through a wholly owned subsidiary or a joint venture structure. Review our branch office vs subsidiary comparison to determine the optimal approach
2. Confirm FDI route — Over 90% of sectors permit 100% FDI through the automatic route. For sectors requiring government approval, additional processing time of 8-10 weeks should be factored in
3. File required regulatory forms — Submit FC-GPR to the RBI within 30 days of share allotment, and FLA returns annually by July 15
4. Leverage DTAA benefits — India and Oman have a Double Taxation Avoidance Agreement that reduces withholding tax on dividends (10%), interest (10%), and royalties and fees for technical services (10% following the January 2025 Protocol, down from the earlier 15%). Proper treaty planning at the structuring stage can significantly reduce the effective tax burden
5. Engage professional advisors — Our FDI advisory and FEMA-RBI compliance teams specialize in helping Middle Eastern investors navigate India's regulatory framework

Impact on Specific Industries

Gems and Jewellery

India is the world's largest diamond cutting and polishing centre, processing approximately 90% of the world's diamonds. The CEPA's zero-duty provisions for gems and jewellery create a direct cost advantage for Indian exporters shipping to Oman, which serves as a re-export hub for luxury goods across the GCC region.

Pharmaceuticals and Medical Devices

Indian pharmaceutical companies, which produce approximately 20% of the world's generic drugs by volume, gain preferential access to Oman's growing healthcare market. Combined with the traditional medicine provisions, this creates a comprehensive healthcare corridor between the two countries.

Textiles and Apparel

India's textile industry—the second-largest employer in the country after agriculture—benefits from zero-duty access to Oman. Companies registered in India from countries like the United States or the United Kingdom can leverage Indian manufacturing capabilities to serve the Middle Eastern market at preferential rates.

Information Technology

The services chapter opens Oman's IT market to Indian companies, complementing India's existing strengths in software development, IT outsourcing, and digital transformation services. The extended CSS provisions (up to two years) make it practical to deploy Indian IT professionals on medium-term projects in Oman.

Key Takeaways

• Near-complete market access: Oman offers zero-duty on 98.08% of tariff lines covering 99.38% of India's exports—one of the most generous offers India has received from any Middle Eastern partner
• Comprehensive services opening: 127 sub-sectors liberalized, including IT, professional services, healthcare, and education, plus the world's first traditional medicine commitment
• Enhanced professional mobility: ICT quota increased from 20% to 50%, CSS stay extended from 90 days to 2 years—transformative for companies deploying professionals to the Middle East
• Dual-hub strategy: Combined with the India-UAE CEPA, companies can now leverage two GCC entry points with preferential trade terms
• Investment corridor: 100% FDI permitted for Indian companies in Oman's major services sectors, creating opportunities for commercial presence across the Gulf region