Oman-India CEPA: Enhancing Business Clarity and Reducing Trade Friction for Investors
MUSCAT, DEC 25 — The Oman–India Comprehensive Economic Partnership Agreement (CEPA) should be viewed as a strategic framework designed to reduce business friction and enhance policy predictability, rather than merely a tariff agreement, according to Azza Al Habsi, a prominent Omani economic expert.
Al Habsi, an economist at Ominvest, explained that CEPA establishes a clearer, rules-based structure for trade, services, and investment. This framework is expected to lower business costs and bolster investor confidence by providing greater visibility in policy.
She noted that what may seem like a "new openness" in the services sector is largely reflective of existing conditions within Oman’s investment regime. The agreement primarily aims to articulate this framework more explicitly for foreign investors. "Such visibility is crucial for credibility, investor confidence, and long-term planning," Al Habsi stated.
Furthermore, she suggested that CEPA could deepen Oman’s integration into India-linked value chains, thus offering strategic advantages as global trade becomes more fragmented. Companies are increasingly looking for reliable hubs that connect Asia, the Gulf, and Africa.
Addressing concerns regarding the headline of "100% foreign ownership," Al Habsi clarified that full foreign ownership is already permitted across various activities in Oman and should not be interpreted as a sudden policy change.
She emphasized that Omanisation and existing labor laws remain unaffected. Importantly, CEPA does not require labor inflows, with Oman retaining full control over visas, quotas, and employment policies.
However, Al Habsi identified two significant gaps that could hinder domestic benefits unless proactively managed through local execution.
First, the agreement does not explicitly connect market access with training, skills development, or technology transfer, leaving such outcomes reliant on domestic policy and investor decisions.
Second, she cautioned that certain sectors open to full foreign ownership often depend on expatriate labor while allowing unrestricted profit repatriation. This might marginalize small and medium-sized enterprises (SMEs) and weaken local income circulation if ownership, management, labor, and profits predominantly reside outside the domestic economy.
"CEPA is a comprehensive framework, not a shortcut," she concluded, adding that its impact on inclusive growth versus capital-only growth will ultimately depend on the actions of investors, business owners, and policy implementation.
Special Analysis by Omanet | Navigate Oman’s Market
The Oman–India Comprehensive Economic Partnership Agreement (CEPA) presents significant opportunities for business growth and investment stability through improved clarity and reduced friction in trade practices. However, it simultaneously poses risks, particularly regarding the potential for crowding out local SMEs if foreign investment predominates without adequate focus on skills development and local reinvestment. Smart investors should prioritize aligning their strategies with Oman’s socio-economic goals to ensure sustainable profit generation and collective growth.
