India and Oman Sign Free Trade Agreement with Broad Tariff Exemptions

Muscat – India and Oman have signed a free trade agreement aimed at broadly eliminating tariffs on goods and facilitating market access, reflecting New Delhi's accelerating efforts to expand its economic and strategic presence in the Middle East, according to an official statement from the Indian Ministry of Commerce.

Under the agreement, Oman granted India full tariff exemptions on over 98% of tariff items, covering key sectors such as gems and jewelry, textiles, plastics, pharmaceuticals, automobiles, and engineering products. In return, India agreed to liberalize tariffs on 77.79% of tariff items, while maintaining protections for sensitive sectors including dairy, tea, coffee, gold, and bullion.

The agreement was signed during Indian Prime Minister Narendra Modi's visit to Muscat, accompanied by several government officials, at a time when U.S. tariffs on Indian exports are increasing, prompting the government to expedite efforts to diversify trade partners and expand its network of bilateral agreements.

Strategic Gateway for Energy and Trade

Although Oman's economy is relatively small, its location near the Strait of Hormuz - one of the world's key oil transit routes - gives the agreement significant strategic weight for India. Data indicates that Oman was the fourth-largest energy supplier to India this year, with liquefied natural gas imports dominating total imports.

The trade volume between the two countries is approximately $10.6 billion for the fiscal year 2024–2025, demonstrating the robustness of their relations. While the agreement may not lead to an immediate surge in Indian exports due to market size, it enhances price competitiveness and opens channels for expansion towards the Gulf, Africa, and West Asia.

Broader Context of India's Agreements

This move is part of a broader strategy by New Delhi, following a trade agreement with the United Kingdom this year and nearing an agreement with the European Union, alongside advanced talks with Gulf Cooperation Council countries and expedited agreements with New Zealand, Chile, and Peru to compensate for lost market access advantages in the U.S.

Indian Commerce and Industry Minister Piyush Goyal stated that the agreement will make exports more competitive in both economies, emphasizing that Oman represents a strategic platform for Indian companies to access broader regional markets.