India–Oman CEPA: Strengthening Maritime Security And Energy Resilience

Policy Update
Kavin Adithya CB

Background

India and Oman have enjoyed close relations for more than five millennia, with maritime trade across the Indian Ocean serving as the foundation of their historical partnership. These early commercial and cultural exchanges gradually evolved into a modern strategic relationship based on mutual trust and shared regional interests. Since establishing diplomatic relations in 1955, the two countries have steadily expanded cooperation in trade, energy, defence, maritime security, investment, and regional connectivity. Their growing engagement was formally recognised in 2008 when India and Oman elevated bilateral ties to a Strategic Partnership.

A significant milestone in this relationship was the signing of the India–Oman Comprehensive Economic Partnership Agreement (CEPA) on 18 December 2025 in Muscat during Prime Minister Narendra Modi’s official visit. The agreement entered into force on 1 June 2026, marking a new phase in bilateral economic cooperation. While traditional free trade agreements primarily focus on reducing tariffs, the CEPA adopts a broader approach by promoting investment, trade in services, technology transfer, logistics, skilled workforce mobility, and long-term strategic collaboration.

The agreement comes at a time when the global economy is facing increasing uncertainty. Geopolitical tensions in West Asia, disruptions to international shipping routes, and growing competition for energy resources have highlighted the importance of building reliable economic partnerships. Oman’s strategic location along key maritime routes and its balanced foreign policy make it one of India’s most dependable partners in the Gulf region. For India, the CEPA is not only expected to expand trade and investment but also strengthen economic resilience, improve regional connectivity, and support its long-term ambition of becoming a leading manufacturing and export hub.

Functioning of the India–Oman CEPA

The India–Oman CEPA establishes a comprehensive framework to strengthen economic cooperation by making trade and investment more efficient and predictable. The agreement reduces tariff and non-tariff barriers, improves market access, facilitates trade in services, and encourages collaboration in logistics, technology, infrastructure, and industrial development. By creating a transparent regulatory environment, it enhances business confidence and encourages long-term commercial partnerships.

One of the agreement’s key features is tariff liberalisation. Lower import duties make Indian products such as pharmaceuticals, engineering goods, textiles, food products, machinery, chemicals, and electronics more competitive in the Omani market. Likewise, Omani exporters receive improved access to India’s large consumer market, creating new opportunities for businesses in both countries.

The CEPA also promotes investment across several strategic sectors, including manufacturing, renewable energy, logistics, tourism, petrochemicals, digital services, and infrastructure. Increased investment is expected to create employment opportunities, encourage technology transfer, improve industrial productivity, and strengthen regional value chains.

Trade in services forms another important pillar of the agreement. Professionals working in information technology, healthcare, engineering, education, finance, and consultancy are expected to benefit from easier market access and greater mobility. This will encourage knowledge sharing, enhance skill development, and deepen institutional cooperation between the two countries.

To improve the ease of doing business, the agreement introduces measures such as simplified customs procedures, digital documentation, and stronger customs cooperation. It also includes clear Rules of Origin, ensuring that preferential tariff benefits are available only to products genuinely manufactured in India or Oman, thereby preventing misuse by third countries.

Maritime connectivity remains central to the success of the CEPA. Oman’s strategically located ports—Duqm, Salalah, and Sohar—provide efficient access to major shipping routes linking Asia, Africa, and Europe. Enhanced cooperation in port infrastructure, logistics, and customs is expected to reduce transportation costs, improve cargo movement, and strengthen regional trade networks. The agreement also complements India’s broader regional initiatives, including the Think West Policy, SAGAR (Security and Growth for All in the Region), the India–Middle East–Europe Economic Corridor (IMEC), and its wider Indo-Pacific strategy.

Performance

Since the India–Oman Comprehensive Economic Partnership Agreement (CEPA) came into force on 1 June 2026, it is still too early to measure its full economic impact. Nevertheless, the agreement has generated a positive response from governments, businesses, and investors in both countries. By providing a stable and transparent framework for trade and investment, the CEPA has encouraged greater business confidence and created new opportunities for long-term economic cooperation.

The available trade data indicate a steady upward trend in bilateral economic relations.

As shown in Graph 1, total trade between India and Oman increased from USD 8.9 billion in 2022–23 to USD 11.18 billion in 2025–26. This consistent growth reflects the strengthening commercial partnership between the two countries even before the CEPA entered into force and provides a strong foundation for future expansion.

Graph 2 illustrates India’s import composition from Oman. Crude oil accounts for 45% of total imports, followed by liquefied natural gas (20%), fertilisers (15%), while methanol and ammonia contribute 10% each. These figures demonstrate Oman’s continuing importance as a reliable supplier of energy and industrial raw materials that support India’s economic growth and industrial development.

The strategic importance of the partnership is further reflected in Graph 3, which evaluates key areas of bilateral cooperation. Energy security receives the highest score (95/100), followed by maritime security (90), trade connectivity (88), defence cooperation (85), and supply chain resilience (82). Together, these indicators show that the India–Oman partnership extends well beyond trade and has become an important pillar of India’s broader economic and strategic interests in the Western Indian Ocean.

Although comprehensive post-implementation data will emerge over the coming years, the initial trends suggest that the CEPA has strengthened bilateral confidence and created favourable conditions for deeper economic integration.

Impact

The India–Oman CEPA is expected to generate significant economic and strategic benefits for both countries. By improving market access and encouraging investment, the agreement creates new opportunities for businesses while strengthening bilateral trade. Better connectivity through Oman’s modern ports is likely to reduce transportation costs, improve logistics efficiency, and provide Indian exporters with easier access to markets across West Asia, Africa, and Europe.

The agreement also supports India’s long-term energy strategy. As one of India’s trusted energy partners, Oman plays an important role in ensuring stable supplies of crude oil and natural gas. Beyond conventional energy, the CEPA creates opportunities for collaboration in renewable energy, green hydrogen, clean technologies, and sustainable infrastructure, supporting India’s transition towards a cleaner and more diversified energy mix.

From a strategic perspective, the agreement reinforces India’s role in the Western Indian Ocean. Stronger economic engagement complements existing defence cooperation and creates greater scope for collaboration in naval logistics, humanitarian assistance and disaster relief (HADR), maritime domain awareness, and anti-piracy operations. These efforts contribute to safer sea lanes and strengthen regional maritime stability.

The CEPA also aligns with several of India’s national initiatives, including Make in India, Atmanirbhar Bharat, PM Gati Shakti, and the India–Middle East–Europe Economic Corridor (IMEC). By promoting trade, investment, and connectivity, the agreement supports India’s long-term objective of becoming a globally competitive manufacturing, trading, and maritime power while strengthening its strategic presence in the Indo-Pacific region.

Emerging Challenges

Despite its promising potential, the successful implementation of the India–Oman CEPA will depend on addressing several practical and strategic challenges.

One of the primary concerns is the evolving geopolitical environment in West Asia. Regional tensions and security risks around the Strait of Hormuz can disrupt global shipping routes, increase transportation costs, and affect the uninterrupted supply of energy. Given that a significant share of India’s energy imports passes through this region, maintaining close diplomatic engagement and maritime cooperation with Oman will remain essential.

Another challenge is the limited awareness of the agreement among Micro, Small, and Medium Enterprises (MSMEs). Many small businesses are unfamiliar with the CEPA’s provisions, export procedures, Rules of Origin, and customs requirements. Without adequate guidance, technical support, and access to finance, many MSMEs may struggle to benefit from the opportunities created by the agreement.

Differences in regulatory standards, customs procedures, and logistics systems may also slow the movement of goods and increase transaction costs. Although the CEPA seeks to simplify trade, effective implementation will require continuous coordination between both governments to minimise administrative delays and improve trade facilitation.

In addition, businesses must adapt to changing global expectations regarding environmental sustainability, digital trade, and cybersecurity. Strengthening digital infrastructure, promoting innovation, and ensuring compliance with international standards will be important for maximising the long-term benefits of the agreement.

Way Forward

The long-term success of the India–Oman CEPA will depend on sustained cooperation, effective implementation, and continuous policy coordination between the two governments. Strengthening institutional mechanisms and addressing operational challenges will help ensure that the agreement delivers its intended economic and strategic outcomes.

Both countries should continue simplifying customs procedures, expanding paperless trade, and improving digital trade infrastructure to reduce transaction costs and make cross-border trade faster, more transparent, and efficient. Harmonising regulatory standards and enhancing customs cooperation will further improve the ease of doing business.

Greater investment should be encouraged in emerging sectors such as renewable energy, green hydrogen, advanced manufacturing, logistics, digital technologies, artificial intelligence, and infrastructure. Expanding industrial cooperation in these areas will promote innovation, generate employment, and strengthen long-term economic resilience.

Improving connectivity through the ports of Duqm, Salalah, and Sohar, along with further development of the Duqm Special Economic Zone, can enhance regional supply chains and strengthen India’s trade links with West Asia, Africa, and Europe. These initiatives will also complement the India–Middle East–Europe Economic Corridor (IMEC) and support broader regional connectivity.

Maritime cooperation should continue to expand through regular naval exercises, intelligence sharing, maritime domain awareness, cybersecurity collaboration, and coordinated efforts to combat piracy and other non-traditional security threats. A secure maritime environment is essential for protecting international trade routes and ensuring uninterrupted commercial activity.

Finally, both governments should increase awareness of the CEPA among MSMEs through export promotion programmes, training workshops, buyer–seller meetings, and financial assistance schemes. Greater collaboration among universities, research institutions, start-ups, and private industries can further encourage innovation, technology exchange, and skill development. By focusing on effective implementation and future-oriented sectors, India and Oman can transform the CEPA into a model of economic cooperation and strategic partnership in the Indian Ocean region.

Reference:

The article titled “Security Issues in the Indian Ocean and India-Oman Relations,” which appears in the provided files, was authored by Mohd Firoz Ahamed. The article was published in World Affairs: The Journal of International Issues (specifically identified in the document headers as World Affairs Winter 2015, Vol 19, No 4).
National Maritime Foundation (NMF). (2026). India–Oman Maritime Relations and Strategic Cooperation in the Western Indian Ocean
Government of India, Ministry of Commerce and Industry. (2026). India–Oman Comprehensive Economic Partnership Agreement (CEPA). New Delhi.
Ministry of External Affairs (MEA). (2026). India–Oman Bilateral Relations. Government of India.
Press Information Bureau (PIB). (2026). India–Oman Comprehensive Economic Partnership Agreement Comes into Force. Government of India.
United Nations Conference on Trade and Development, Strait of Hormuz Disruptions: Implications for Global Trade and Development, 2026.
Observer Research Foundation (ORF Middle East), India’s Quiet Maritime Turn in Middle Eastern Waters, April 2026.
Vajiram & Ravi, India–Oman Bilateral Relationship Explained, June 2026.

About the Contributor

Kavin Adithya CB is a Research and Editorial Intern at IMPRI, currently pursuing an M.A. in International Relations at Loyola College, Chennai. I have a strong Interest in International Political Economy, International Relations, Defence, Public policy, Geopolitics, and Human Rights Strong area of interest to explore and develop my skills.

Acknowledgement

The author sincerely thanks the reviewers and editorial team for their valuable comments, constructive suggestions, and guidance. Their feedback helped improve the clarity, structure, and analytical depth of this policy update.

Reviewers: Nayanshi Jain, Ritobrata

Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.