India and Oman have signed a Comprehensive Economic Partnership Agreement (CEPA) that marks a meaningful shift in India’s engagement with Gulf economies, particularly in agriculture and processed food trade. Signed on December 18 during Prime Minister Narendra Modi’s official visit to Muscat, the agreement offers Indian exporters near-complete duty-free access to Oman’s agricultural import market, while simultaneously drawing clear red lines around sensitive domestic sectors.

Oman is a net food-importing nation with limited arable land and heavy dependence on overseas suppliers for staples, processed foods, and protein. In calendar year 2024, Oman’s agricultural imports were estimated at around $6 billion. India, despite geographic proximity and strong political ties, has historically under-penetrated this market due to tariff barriers and competition from countries with existing free trade agreements.

The CEPA is designed to address this structural gap. Total bilateral trade between India and Oman stood at $10.61 billion in FY2024–25, registering a robust 18.6 percent year-on-year growth. While energy and minerals dominate current trade flows, policymakers have increasingly pushed for diversification into agriculture, food processing, textiles, and consumer goods.

What is changing

Under the agreement, India will receive zero-duty access on 98.08 percent of Oman’s tariff lines, covering 99.38 percent of Indian exports by value. In agriculture specifically, Oman has committed to granting duty-free access on 99 percent of its agri imports, placing Indian exporters on equal footing with major agricultural suppliers such as the United States, Singapore, and EFTA countries.

Key beneficiaries on the Indian side include boneless bovine meat, butter, bakery products, sweet biscuits, chocolates, sugar confectionery, preserved potatoes, natural honey, cashew kernels, and malt extract. Notably, the deal removes Oman’s existing 5 percent tariff on Indian bakery products such as bread, pastries, cakes, wafers, and biscuits, a category where Indian firms have steadily built export capability.

In return, India has agreed to phased tariff concessions on select Omani exports, including sweet biscuits, rusks, toasted bread, pastries and cakes, papad, and pet food. These duties will be gradually eliminated over a five- to ten-year period, giving domestic producers time to adjust.

Why it matters

From an Indian policy perspective, the CEPA reflects a maturing trade strategy. Rather than blanket liberalisation, the agreement adopts a surgical approach—opening external markets where India has export competitiveness, while protecting politically and economically sensitive sectors at home.

Crucially, India has excluded a wide range of agricultural products from tariff concessions. Dairy products such as milk, cheese, butter, ghee, yogurts, and spreads have been kept outside the agreement, as have cereals, most fruits and vegetables, edible oils, and oilseeds. These exclusions are aimed at insulating domestic farmers from import surges and price volatility, especially in sectors with strong political sensitivity and livelihood dependence.

For Indian exporters, particularly in meat processing, bakery, and value-added agri products, the deal materially improves price competitiveness in Oman. Duty-free access not only lowers landed costs but also improves visibility and shelf space in a market that acts as a gateway to the wider Gulf region.

Official views and policy signals

The structure of the agreement signals India’s continued preference for comprehensive but controlled trade pacts, following similar templates seen in deals with the UAE and Australia. Government negotiators have repeatedly emphasised that India will not compromise on farmer protection, even as it pursues export growth.

Oman, for its part, views the CEPA as a supply-chain diversification tool, reducing over-dependence on a narrow set of food-exporting nations while securing reliable access to competitively priced products.

Further details on the agreement have been outlined by India’s commerce ministry and official government releases, available through platforms such as the Ministry of Commerce and Industry website.

Potential business and market implications

For India, the immediate impact is likely to be most visible in the agri-export ecosystem rather than equity markets. Export-oriented food processors, meat exporters, and bakery manufacturers stand to benefit from improved volumes and margins, though the gains will accrue over time rather than instantly.

At a macro level, the deal strengthens India’s trade presence in the Gulf, a region that remains strategically important for energy security, remittances, and geopolitical engagement. The agreement also reinforces India’s broader ambition to increase its share in global agricultural and processed food exports.

Bull vs Bear scenario

The bullish scenario assumes Indian exporters are able to scale up supply, meet Oman’s regulatory and quality standards, and leverage duty-free access to displace competitors. This could lead to sustained export growth and deeper integration into Gulf food supply chains.

The bearish scenario centres on execution risks-logistics bottlenecks, compliance costs, and limited branding penetration could blunt the benefits. Additionally, if domestic protection pressures rise, future trade negotiations could face political resistance.

Key risks

Risks include non-tariff barriers, changes in food safety norms, currency volatility, and global commodity price swings. On the domestic front, any perception of indirect pressure on protected farm sectors could trigger policy recalibration. As with most trade agreements, the real impact will depend less on tariff schedules and more on how effectively businesses operationalise the new access.