Explainer: India-Oman’s $10 billion trade poised for diversification after FTA

India imported goods worth $6.55 billion from Oman, while exports to the Gulf nation stood at $4.07 billion, leading to a trade deficit of $2.48 billion in the previous financial year.

India’s exports to Oman during the previous fiscal stayed almost steady with slight dips from $4.48 billion in FY23 and $4.43 billion in FY24, while imports witnessed an almost 45 percent jump on-year due to a sharp contraction in 2023-24.

Top exports to Oman in FY25 were led by petroleum products at $1.43 billion, engineering goods worth $812.2 million, mica, coal and other ores of $428.6 million and chemicals amounting to $241.4 million.

The country also ships limited amounts of textiles, gems and jewellery, and leather products to Oman. A trade deal could boost exports of these labour-intensive goods that are facing the brunt of steeper tariffs from the US.

The FTA could also give a boost to India’s second-largest export item to Oman – engineering goods, shipments of which to the US declined by 5.1 percent in August compared to the previous month as it started to feel the effects of steeper tariffs.

Around 80 percent of Indian goods are subject to an average import duty of 5 percent by Oman.

Oman’s import duty ranges from zero to 100 percent along with steeper tariffs on specific meats, wines and tobacco products.

When it comes to India’s imports from Oman, mineral fuels and fertilisers make up the largest share.

Out of India’s imports worth $6.55 billion from the Gulf nation in FY25, $4.01 billion consisted of mineral fuels and fertilisers, followed by organic chemicals worth $608.74 million and plastics valued at $219.24 million.

India-Oman FTA timeline

Talks for a free trade agreement between India and Oman began in November 2023.

Termed as a Comprehensive Economic Partnership Agreement (CEPA), both sides have held five rounds of in-person negotiations on the proposed deal, with the last one held in New Delhi in January.

Minister of State for Commerce & Industry, Jitin Prasada had in August 2025 informed the Rajya Sabha that negotiations for the CEPA with Oman have concluded.

As of September 2025, both India and Oman have indicated that the trade deal will be announced soon, with Commerce Minister Piyush Goyal indicating earlier this month that it could happen within weeks.

Attempts to broker a trade deal with a second Gulf nation follows India’s Comprehensive Economic Partnership Agreement with UAE, signed on February 18, 2022 and entered into force from May 1, 2022.

Since the signing of CEPA, bilateral merchandise trade has nearly doubled to $83.7 billion in 2023-24 from $43.3 billion in FY21, according to commerce ministry.

Bilateral trade between India and the UAE reached $100.06 billion in FY25. However, imports grew significantly faster at 32.02 percent on-year, versus exports at 2.84 percent.

India’s trade deal with UAE helped boost its labour intensive exports notably in gem and jewellery that have grown from $4.95 billion in FY22 to $8.04 billion in FY24, an increase of over 60 percent.

New Delhi is therefore targeting $100 billion in bilateral non-oil and non-precious metal trade with the UAE by the next three to four years as it seeks to further diversify its exports.

Given the benchmark set by the India-UAE FTA and a pact with Oman on the anvil, the government hopes to sign similar deals with more members of the Gulf Cooperation Council (GCC), including Qatar.

Faced with steeper US tariffs, the India-Oman FTA and additional deals with GCC nations could play a key role in diversifying Indian exports by reducing dependence on traditional buyers.