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India–Oman CEPA: analysis

20 Dec 2025 GS 3 Economy
India–Oman CEPA: analysis Click to view full image

Background

  • India and Oman signed a Comprehensive Economic Partnership Agreement (CEPA) in Muscat.

  • Signed by Piyush Goyal and Qais bin Mohammed Al Yousef.

  • Signed in the presence of Narendra Modi and Haitham bin Tarik.     

Salient features of the CEPA

 1. Market access and tariff liberalisation

Oman’s commitments

  • Duty-free access to 98.08% of tariff lines

  • Covers 99.38% of India’s exports to Oman

India’s commitments

  • Liberalised tariffs on 77.79% of tariff lines

  • Covers 94.81% of India’s imports from Oman

2. Sectoral coverage

Indian sectors gaining full tariff elimination

  • Gems and jewellery

  • Textiles and apparel

  • Leather and footwear

  • Sports goods

  • Plastics and furniture

  • Agricultural products

  • Engineering goods

  • Pharmaceuticals and medical devices

  • Automobiles

Sensitive sectors excluded by India

  • Dairy products

  • Tea and coffee

  • Rubber and tobacco

  • Gold and silver bullion

  • Jewellery

  • Scrap of base metals

Shows India’s calibrated approach—export promotion without harming domestic producers.

Services and labour mobility

Mode 4 commitments (Movement of natural persons)

  • Intra-Corporate Transferees (ICTs) quota increased from 20% to 50%

  • Contractual Service Suppliers

    • Stay extended from 90 days to 2 years

    • Further 2-year extension possible

Mode 4 refers to the movement of natural persons across countries to supply services temporarily.

It is one of the four modes of service supply defined under the General Agreement on Trade in Services (GATS) of the World Trade Organization (WTO).

Meaning of Mode 4

  • It allows individual service providers (not goods or capital) to enter another country temporarily to provide services.

  • The person remains a citizen and employee of the home country.

  • It does not lead to permanent migration or citizenship.

Who comes under Mode 4?

  • Intra-Corporate Transferees (ICTs)

  • Contractual Service Suppliers

  • Independent professionals

  • Specialists, consultants, engineers, IT professionals, doctors (as per agreement)

What Mode 4 does NOT include

  • Permanent employment

  • Settlement or permanent residency

  • Low-skilled or unskilled labour (unless specifically mentioned)

  • Access to welfare or political rights

Example

  • An Indian IT engineer sent by an Indian company to work in Oman for 2 years under a service contract → Mode 4

  • An Indian citizen migrating permanently to Oman → Not Mode 4

General Agreement on Trade in Services (GATS) modes

Mode

What it means

Example

Mode 1

Cross-border supply

Online consultancy

Mode 2

Consumption abroad

Medical tourism

Mode 3

Commercial presence

Foreign company branch

Mode 4

Movement of professionals

Indian engineer working abroad temporarily

Significance

  • First time Oman has offered such wide-ranging Mode 4 commitments

  • Benefits Indian professionals in:

    • IT and IT-enabled services

    • Engineering

    • Healthcare

    • Technical and professional services

Trade data (2024–25)

  • India’s exports to Oman: $4.06 billion

    • About 0.93% of India’s total exports

  • India’s imports from Oman: $6.5 billion

    • About 0.91% of India’s total imports

Strategic and geopolitical importance

  • First bilateral trade agreement Oman has signed since its US FTA (2006).

  • India’s second CEPA with the Gulf Cooperation Council (GCC):

    • First was with United Arab Emirates in 2022.

  • Oman acts as a gateway for India to:

    • GCC region

    • Eastern Europe

    • Central Asia

    • Africa

Broader significance for India

  • Enhances trade diversification beyond traditional partners

  • Boosts labour-intensive manufacturing exports

  • Strengthens services exports and overseas employment

  • Supports Make in India and Global Value Chain integration

  • Reinforces India’s economic presence in the West Asian region

  
  


Prelims Practice MCQs

Q. With reference to the India–Oman Comprehensive Economic Partnership Agreement (CEPA), consider the following statements:

  1. Oman has offered duty-free access to more than 98% of its tariff lines to India.

  2. India has offered duty-free access to more than 90% of its tariff lines to Oman.

  3. The agreement covers both goods and services, including labour mobility.

Which of the statements given above is/are correct?

A. 1 and 2 only
B. 1 and 3 only
C. 2 and 3 only
D. 1, 2 and 3

Correct answer: B

Explanation:

  • Statement 1 is correct: Oman offered duty-free access to 98.08% of tariff lines.

  • Statement 2 is incorrect: India liberalised 77.79% of tariff lines, not over 90%.

  • Statement 3 is correct: CEPA includes services and enhanced labour mobility (Mode 4).

Q. Which of the following sectors are expected to benefit from full tariff elimination under the India–Oman CEPA?

  1. Gems and jewellery

  2. Pharmaceuticals and medical devices

  3. Dairy products

  4. Engineering goods

Select the correct answer using the code below:

A. 1, 2 and 4 only
B. 1 and 3 only
C. 2 and 3 only
D. 1, 2, 3 and 4

Correct answer: A

Explanation:

  • Gems and jewellery, pharmaceuticals, and engineering goods receive full tariff elimination.

  • Dairy products are excluded as sensitive items by India.

Q. In the context of international trade agreements, Mode 4 refers to:

A. Cross-border supply of services
B. Consumption of services abroad
C. Commercial presence of service providers
D. Movement of natural persons supplying services

Correct answer: D

Explanation:

  • Mode 4 under GATS deals with temporary movement of professionals.

  • India–Oman CEPA significantly expands Mode 4 commitments.



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