Muscat, Dec 18 (PTI) India and Oman signed a free trade agreement on Thursday, which will provide duty free access to 98 per cent of India's exports including textiles, agri and leather goods in Oman.

On the other hand, India will reduce tariffs on Omanese products such as dates, marbles and petrochemical items.

The deal is expected to come into force from the first quarter of next fiscal. The pact is coming at a time when India is facing steep 50 per cent tariffs in its largest export destination, the US.

The agreement was signed by Commerce and Industry Minister Piyush Goyal and Oman's Minister of Commerce, Industry and Investment Promotion Qais bin Mohammed Al Yousef in the presence of Prime Minister Narendra Modi in Muscat.

Oman has offered zero-duty access on over 98 per cent of its tariff lines (or product categories), covering 99.38 per cent of India's exports to Oman.

All major labour-intensive sectors including gems and jewellery, textiles, leather, footwear, sports goods, plastics, furniture, agricultural products, engineering products, pharmaceuticals, medical devices, and automobiles receive full tariff elimination.

Out of these, immediate tariff elimination is being offered on 97.96 per cent of product categories.

On the other hand, India is offering tariff liberalization on 77.79 per cent of its total tariff lines (12,556) which covers 94.81 per cent of India's imports from Oman by value.

For the products of export interest to Oman and which are sensitive to India, the offer is mostly a tariff-rate quota (TRQ) based tariff liberalization for items such as dates, marbles and petrochemical products.

To safeguard its interest, sensitive products have been kept in the exclusion category by India without offering any concessions, especially agricultural products, including dairy, tea, coffee, rubber, and tobacco products; gold and silver bullion, jewellery; other labour-intensive products such as footwear, sports goods; and scrap of many base metals.

At present, the labour-intensive goods in Oman attract about 5 per cent import duty.

On the services sector front, Oman will extend substantial commitments across a broad spectrum of sectors including computer related services, business and professional services, audio-visual services, research and development, education and health services.

Oman's global services imports stood at USD 12.52 billion, with India's share at only 5.31 per cent. It shows a significant untapped potential for Indian service providers.

Further a major highlight of the CEPA is the enhanced mobility framework for Indian professionals.

For the first time, Oman has offered wide-ranging commitments under Mode 4 (movement of skilled professionals), including a notable increase in the quota for intra-corporate transferees from 20 per cent to 50 per cent, together with a longer permitted duration of stay for contractual service suppliers - extended from the existing 90 days to two years, with the possibility of a further two-year extension.

The agreement also provides for more liberal entry and stay conditions for skilled professionals in key sectors such as accountancy, taxation, architecture, medical and allied services, supporting deeper and more seamless professional engagement.

The pact also provides for 100 per cent Foreign Direct Investment by Indian companies in major services sectors in Oman through commercial presence, opening a wide avenue for India's services industry to expand operations in the region.

In addition, both sides have agreed to hold future discussions on social security pact once Oman's contributory social security system is implemented, reflecting a forward-looking approach to facilitating labour mobility and worker protection.

Oman is an important strategic partner in the region and is a key gateway for Indian goods and services to the wider Middle East and Africa.

Nearly 7 lakh Indian nationals reside in Oman. India receives about USD 2 billion remittances from Oman annually.

Indian enterprises have built a strong presence in Oman, with over 6,000 Indian establishments operating across sectors. India has received USD 615.54 million foreign direct investment from Oman during april 2000 and September 2025.

This is the second trade pact signed in the last six months after the UK and is a part of strategy to sign trade agreements with developed economies that are not competing with our labour-intensive interests and provide opportunities for Indian businesses.

This is also the second trade deal of India with a GCC (Gulf Cooperation Council) member. India in May 2022 implemented a similar pact with the UAE and it is expected to soon start talks with Qatar. The other members of the council are Bahrain, Kuwait, and Saudi Arabia.

Talks for the free trade agreement, officially termed as CEPA (Comprehensive Economic Partnership Agreement), formally began in November 2023 and the negotiations concluded this year.

In free trade agreements, the two trading partners either significantly reduce or eliminate customs duties on a maximum number of goods traded between them. They also ease norms to promote trade in services and attract investments.

This is the first bilateral agreement that Oman has signed with any country since US in 2006. Oman is the third-largest export destination for India among the GCC countries.

India-Oman bilateral trade was about USD 10.5 billion (exports USD 4 billion and imports USD 6.54 billion) in 2024-25. PTI RR ANU BAL BAL

Free trade agreement expands duty-free access to most exports and enhances services mobility and investment opportunities. The free trade agreement establishes zero-duty access on over 98 percent of one party's tariff lines covering 99.38 percent of exports, with immediate elimination on 97.96 percent of product categories; reciprocal liberalisation covers 77.79 percent of the other party's tariff lines covering 94.81 percent of imports by value. Sensitive products are protected through exclusions or tariff-rate quotas. The treaty also secures comprehensive services commitments and an enhanced Mode 4 mobility framework, including higher intra-corporate transferee quotas, extended stays for contractual service suppliers, and 100 percent foreign direct investment for commercial presence in major services sectors.