As India aims to become the world’s third-largest economy soon, the recent free trade agreement (FTA) with Gulf nation Oman will be a big booster for the country’s economy in the coming years, say experts. From MSME exporters to a large number of working professionals, Indians are expected to gain a lot from the deal.

“The deal with Oman will help deepen India’s trading relationships with the Middle East,” Gaura Sengupta, Chief Economist at IDFC FIRST Bank, told Fortune India.

Big opportunity for India’s MSME exports

As MSME products are usually price-sensitive, even small logistics costs, port delays, or domestic taxes can wipe out the tariff advantage offered by trade agreements. However, under this Comprehensive Economic Partnership Agreement (CEPA), Oman has offered market access to India with zero duty on 98% of tariff lines. According to experts, this achievement will create large-scale opportunities for Indian MSME exporters.

“MSMEs in leather, footwear, textiles, gems, and jewellery will benefit the most. Earlier, these sectors depended heavily on exports to the US. Due to higher US tariffs, access to the American market has become difficult. In such a situation, exporting to countries like Oman and Russia can help Indian MSMEs,” Nilanjan Banik, Professor at Bennett University’s School of Business, told Fortune India.

Experts also suggested that the market share of MSME exports is expected to increase after this deal. “As MSMEs account for 45% of India’s overall merchandise exports. That said, to gain market share in export markets, enhancing the scale of operations is important, as this will make exports more competitive,” Sengupta said.

A step towards energy self-sufficiency

One of the key highlights of this agreement is that it can help India become energy self-sufficient, as Oman offers greater access to high-quality coal and natural gas.

“India needs large amounts of natural gas because it lacks high-quality coal. Speciality steel, used in defence equipment, jet engines, and car parts, requires extremely high temperatures that Indian coal cannot provide. Access to natural gas from countries like Oman can help India become more energy self-sufficient and produce speciality steel domestically,” Banik said.

Major benefits for Indian workers

The FTA between India and Oman also includes a clause that requires at least 50% of employees in Indian businesses in Oman to be Indians. This means workers from countries like Bangladesh or Pakistan cannot fill these positions.

“This is a major benefit for Indian labour. It also means higher remittances, as Indian workers will send more money back home. India has a large number of semi-skilled and low-skilled workers who can now find jobs in small businesses in Oman. From an economic point of view, this makes the partnership very beneficial for India,” Banik added.