The India-Oman Comprehensive Economic Partnership Agreement (CEPA), which entered into force on Monday, eliminates tariffs on most Indian exports to Oman, covering about 99% of the value of India’s shipments to the Gulf state. The agreement comes at a time when India is seeking to safeguard critical supply chains amid ongoing turmoil in the Middle East following U.S.-Israeli attacks on Iran on Feb. 28.

Indian officials and trade experts say the pact assumes added significance as the closure of the Strait of Hormuz threatens one of the world’s most important energy and shipping routes. Despite efforts to diversify sourcing and transport networks, India remains dependent on the corridor for roughly 30% of its crude oil imports and about 90% of its liquefied petroleum gas imports.

In a statement, India’s Ministry of Commerce and Industry said Oman’s ports of Sohar, Duqm and Salalah would provide Indian exporters with enhanced access to Gulf and East African markets, helping establish what it described as a new trade gateway for Indian businesses.

Anil Wadhwa, a former Indian ambassador to Oman and a distinguished fellow at the Vivekananda International Foundation, said the agreement had acquired immediate strategic relevance because of the regional crisis.

“The coming into force of the CEPA between India and Oman has immediately gained significance due to the crisis in the Middle East and the closure of the Strait of Hormuz,” Wadhwa said, adding that the pact offered India alternative logistics channels, transshipment facilities and stronger commercial linkages at a time of growing uncertainty in global supply chains.

He said the agreement would not fully shield India from the broader economic consequences of a prolonged regional conflict but could help mitigate disruptions by preserving access to key trade corridors.

The CEPA is India’s second bilateral trade agreement with a member of the Gulf Cooperation Council after a similar pact with the United Arab Emirates signed in 2022. For Oman, the deal is its second bilateral free trade agreement after its accord with the United States in 2006.

Oman is India’s second-largest trading partner in the Gulf region, with bilateral trade exceeding $11 billion in the 2025-26 fiscal year.

Industry groups view the agreement as a mechanism to strengthen India’s manufacturing exports while reducing logistical dependence on routes affected by the Hormuz crisis.

Manish Mohan, senior director at the Confederation of Indian Industry, said the prolonged disruption of shipping through the strait had heightened concerns over fuel imports, fertilizer supplies and freight costs.

India, the world’s second-largest fertilizer consumer after China, uses more than 60 million tonnes of fertilizer annually. The conflict involving Iran has affected fertilizer supply chains, with Gulf producers accounting for about one-third of India’s imports of urea and phosphate-based fertilizers.

Mohan said Oman’s location outside the Strait of Hormuz increased its value as a commercial hub and alternative entry point for Indian imports if regional instability persists.

The agreement is also expected to support investment flows and deepen economic ties between the two countries, while providing Indian exporters with improved access to markets across the Gulf and eastern Africa through Omani ports and logistics infrastructure.