Amid the Strait of Hormuz blockade and uncertainty over peace talks between Iran and the US, the Commerce and Industry Ministry Monday said the India-Oman free trade agreement (FTA) signed in December could enter into force as early as June 1.
The likely implementation, within months of signing, comes as Delhi pushes for faster operationalisation of the deal since Omani ports, mainly Salalah and Duqm, fall outside the Strait and could help India reroute exports for West Asia and Africa.
Commerce Ministry officials said several meetings have been held with exporters to explore opportunities for pushing food and other low-margin, labour-intensive products, given Oman’s geographic advantage during the current crisis.
While Oman’s annual demand is limited, the pact offers a transit window. Officials said that only two UAE ports, Khor Fakkan and Fujairah, are not currently facing operational difficulties. Overall trade with UAE, India’s largest trading partner in the Gulf, has declined over 35% in April.
“Oman’s ports offer an advantage that the Government is planning to leverage. There are several products which would be prioritised, but Muscat’s annual demand is barely $40 billion, and there is no alternative to trade with, say, the UAE. Besides, currently not many shipping lines are taking that route, and freight rates have more than doubled, which is a bigger challenge,” an exporter said.
Trade data showed that while commerce with West Asian countries has come under pressure since the Strait of Hormuz was closed on March 2, trade with Oman has picked up. Energy imports from Iraq, Qatar and the UAE declined sharply in April, but shipments from Oman jumped 246.42% to $1.48 billion last month, compared to $429.58 million in April last year.
Before the war, India’s trade had been heavily dependent on the UAE and Saudi Arabia. The two countries accounted for 8.4% and 2.7% of India’s total exports respectively in FY25, while Oman’s share stood at just 0.9%. On the import side, the UAE and Saudi Arabia comprised 8.8% and 4.2% of India’s total imports, with Oman again at 0.9%, Commerce Ministry data showed.
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The pact with Oman also assumes significance given its role in the ongoing West Asia conflict. Iran’s Deputy Foreign Minister Kazem Gharibabadi said last week that Tehran is working on arrangements to determine what services “Iran and Oman are providing in the Strait of Hormuz”. Iranian Foreign Minister Abbas Araghchi also said Iran was coordinating with Oman on the future management of the strait.
Under the FTA, Oman has offered zero-duty access for Indian goods on 98% of its tariff lines. Oman largely exports crude oil, liquefied natural gas, fertilisers, and chemical inputs such as methyl alcohol and anhydrous ammonia, along with petroleum coke. Indian exports to Oman, largely consisting of machinery and parts, have doubled in the last five years from $3 billion to $6 billion. New Delhi’s top exports, apart from naphtha and petrol, include machinery, aircraft, rice, iron and steel articles, beauty and personal care products, and ceramics.
Currently, only 15.33% of India’s export value and 11.34% of tariff lines (2022–24 average) enter the Omani market at zero duty under the Most Favoured Nation (MFN) regime. Under the CEPA, Indian exports to Oman that earlier faced duties of up to 5%, valued at around $3.64 billion, are expected to gain significantly from improved price competitiveness, the ministry had said at the time of signing in December.
The ministry had also pointed to Oman’s electronics imports, worth $3 billion in 2024, against India’s exports of just $123 million, indicating clear scope for expansion. Key import segments include smartphones, photovoltaic cells, telecom instruments and parts, boards and cabinets for electric control or distribution, and static converters.
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“India already exports smartphones, static converters, and boards and cabinets, with a relatively stronger presence in the latter two. Import duties are already zero for most electronics, and under the trade deal, remaining items — boards and cabinets, static converters, and television reception apparatus — also move to zero duty, improving tariff certainty,” the ministry had said.
