The Multi-Faceted Trajectory of the India–Oman Strategic Partnership

May 01, 2024

Summary

India–Oman ties have strengthened remarkably in recent years, with regular high-level exchanges between the two countries. The bilateral ties span multiple sectors including energy, trade and investment, technology, defence and security cooperation. Both countries enjoy close maritime proximity and have shared concerns about regional maritime security.

Introduction

India and Oman share strong bilateral relations marked by shared cultural, historical and economic realities. India–Oman relationship has been on an upswing since the establishment of diplomatic ties in 1955. Oman is one of the closest strategic partners of India in West Asia. Oman’s strategic location near the entry point of the Strait of Hormuz, overlooking the Arabian Sea makes it an important constituent in India’s approach towards West Asia and the Indian Ocean Region.

In recent years, Oman has received renewed attention under the ‘Think West’ policy of Prime Minister Narendra Modi. The high-level visits of Sultan Haitham bin Tarik to India in 2023 and Prime Minister Modi’s visit to Oman in 2018 have further consolidated the bilateral relations. The strong people-to-people ties have been enhanced by the presence of a large Indian diaspora in Oman. As of 2023, around 5,27,108 Indians are living in Oman, comprising the second-largest expatriate community in the country, after Bangladesh.1

High-level Visits and Strategic Partnership

There have been regular high-level visits between both the countries. During the November 2008 visit of Prime Minister Manmohan Singh to Oman, both countries decided to elevate the bilateral relationship to a strategic partnership. In December 2010, a Higher Committee on Economic Cooperation outlined nine areas of cooperation including agriculture, healthcare, infrastructure, tourism, chemicals and fertilisers, education, oil and gas, power and mining.2

Prime Minister Modi paid a state visit to Oman from 11 to 12 February 2018. Sultan Qaboos and Prime Minister Modi reaffirmed their commitment to deepen the strategic partnership. Eight agreements and Memorandums of Understanding (MoUs) were signed pertaining to legal collaboration, healthcare, space exploration, tourism and other areas. Both the countries committed to combat terrorism globally and highlighted the significance of undertaking reforms in the United Nations (UN). Emphasis was further laid on improving people-to-people ties between both the countries.3

Sultan Haitham succeeded Sultan Qaboos in 2020. Qaboos ruled Oman for 50 years since 1970. Modi’s 2018 visit was reciprocated with Haitham’s state visit to India in 2023. Five agreements and MoUs on culture, IT, health, defence and other subjects were signed between the two countries. During the visit, a new ‘India-Oman joint vision, a partnership for the future’ was adopted, outlining ten areas of cooperation, aligning Oman’s Vision 2040 with India's development objectives.4 Both leaders stressed on the importance of maintaining regional stability and reaffirmed their commitment to ramping up cooperation in the fight against terrorism and emphasised the need of promoting the universal principles of tolerance, coexistence, peace and moderation while underlining the necessity of rejecting all forms of violent extremism.5

Apart from the leader-level visits, there have been regular ministerial visits and meetings, especially over the last five years. External Affairs Minister S. Jaishankar visited Oman in 2019 where both sides reiterated their commitment to further deepen defence, security and maritime cooperation.6 Jaishankar’s visit to Oman following his Iran visit came in the backdrop of US President Donald Trump’s decision to withdraw from the Iranian nuclear agreement which led to a spate of maritime incidents and insecurity in the Gulf of Oman. Oman’s Foreign Minister Sayyid Badr al-Busaidi also visited India in 2020 and 2022. In addition to various ministerial and secretary-level visits, the Minister of State for External Affairs has made three visits to Oman in the last five years.

Oman, along with the UAE and Egypt from West Asia, were special invitees to the G20 during India’s presidency in 2023. Oman was represented at the Summit by its Deputy Prime Minister Asaad bin Tariq bin Taimur Al Said. Nine ministers and several other official delegations attended over 150 G20 Ministerial and working group meetings held in India.7

India–Oman Strategic Dialogue is an annual forum conceived to strengthen bilateral relations and increase cooperation in newer domains. During the ninth edition of the Dialogue, held on 26 February 2024 in Muscat, India’s Deputy National Security Advisor Vikram Misri discussed the regional situation in the Red Sea amidst the Gaza war, with his Omani counterparts. Both sides reaffirmed their commitment to resolving current bilateral challenges and examining new areas of cooperation, including disaster management, oceanography, artificial intelligence, and the military, security and strategic domains.8

India and Oman seek convergence in their trajectory towards becoming developed nations, as envisaged by their future visions of ‘Viksit Bharat 2047’ and ‘Oman Vision 2040’. Their long-term partnership is testimony to the value of building robust relationships for the overall development of India's West Asia policy as both countries negotiate the multifaceted nature of a changing geopolitical landscape.

Maritime, Defence and Security Cooperation

Oman is India’s oldest defence partner in the Gulf region. Both countries signed a military protocol agreement in 1972 which led to a three-year deputation of Indian Navy personnel to the Omani Navy in 1973. The office of the Indian Defence Advisor in Muscat began functioning in 1989. Oman opened their Defence Attaché’s office at New Delhi in 2002. India and Oman signed a MoU on Defence Cooperation in 2005 which emphasises further strengthening of defence cooperation.9 Defence Minister Manohar Parrikar visited Oman in 2016, where he discussed bilateral defence cooperation with Omani officials, and signed four MOUs and agreements to enhance collaboration in defence and maritime security. The agreements covered cooperation in tackling marine crime prevention at sea between the respective coast guards, maritime issues, and protocol on exchange of flight safety information between their air forces.10

The India–Oman Joint Military Cooperation Committee (JMCC) is the highest forum for defence engagement between both the countries. The JMCC assesses and advises the general framework of defence exchanges between the two countries. The 12th meeting of the JMCC was held in Oman in 2024 where both the countries agreed to enhance cooperation in the fields of training, joint exercise, information sharing, oceanography, ship-building, and Maintenance, Repair, and Overhaul (MRO). A MoU was signed on the purchase of defence material and equipment, which would serve as the framework for further cooperation in the defence sector.11

Oman does not make major investments in the defence sector. Oman’s defence budget was reduced to US$ 7.8 billion in 2023 from US$ 9.2 billion in 2019, while the budget for equipment acquisition was reduced to US$ 1.3 billion in 2023 from US$ 2.2 billion in 2019.12 Oman’s major defence requirements include land vehicles, simulators and tactical communications systems. India has supplied Oman with INSAS rifles in 2010.13

Oman is among the few countries with which all three services of Indian armed forces undertake regular military exercises. There is a regular exchange of visits by the Service Chiefs from both sides. The fourth edition of a 13-day long military exercise 'Al Najah' between the armies of India and Oman was conducted on 1–13 August 2022 in Rajasthan.14 The sixth edition of the five-day joint air exercise ‘Eastern Bridge-VI’, between the Royal Air Force of Oman and the Indian Air Force was successfully held at Air Force Station Jodhpur from 21–25 February 2022.15 Similarly, the Indian Navy and the Royal Navy of Oman participated in the 13th edition of bilateral exercise ‘Naseem Al Bahr’ from 19–24 November 2022 off the coast of Oman.16

These exercises are crucial for creating synergies between the military personnel from both sides about each other’s operational procedures which becomes helpful in undertaking joint operations in the future, in the backdrop of any crisis or instability in the western Indian Ocean region. Soldiers from Oman undergo regular military courses and training in the various prestigious military institutes of India.

Oman's strategic location near the Strait of Hormuz, a vital maritime choke point, and the Gulf of Oman connecting the Persian Gulf to the Arabian Sea, makes it pivotal for global trade and maritime security. Furthermore, Oman’s proximity to the Red Sea and the Horn of Africa makes it a geopolitically important country with respect to India’s interests in the Indian Ocean and the broader Indo-Pacific region, which includes trade and energy security among others. India can access the entire Gulf region through Oman’s ports bypassing the strategic choke points of Strait of Hormuz and the Bab el-Mandeb Strait.

India has been undertaking anti-piracy operations in the strategically important Gulf of Aden since 2008. During Modi's Oman visit in 2018, an Annexure was signed to an existing MoU on Military Cooperation between India and Oman relating to the Duqm port in Oman. This MoU helps in facilitating the Indian Navy in extending their anti-piracy operations in the Gulf of Aden for longer durations by providing operational turn-around and logistical facilities to the naval ships docked at Omani ports.17 In the current backdrop of the instability in the Red Sea owing to resurgent attacks on commercial shipping by Somalian pirates and Houthi rebels of Yemen, India has been assigned a dedicated zone within the Duqm Port. This will further strengthen the Indian Navy's position as a net security provider and strengthen its role as a first responder during Humanitarian Assistance and Disaster Relief (HADR) operations.18

Apart from the Duqm Port, the Salalah Port holds importance for India’s maritime security due to its proximity to the Gulf of Aden, Bab el-Mandeb Strait and Red Sea. Indian naval ships and submarines make regular port calls in Salalah. The Indian Navy has been launching its P-8I long-range maritime surveillance aircraft from Salalah to carry out anti-piracy sorties in the region.19 India–Oman Joint Maritime Committee, which was set up to work towards ensuring maritime security in the Indian Ocean Region, held its first meeting virtually on 23 February 2022.20 Oman is also a member of the Indian Ocean Naval Symposium, a forum conceived by the Indian Navy in 2008 to enhance maritime cooperation among the navies of the Indian Ocean littoral states.21

In recent times, Oman has fostered close relations with China, particularly in the fields of economic investments, oil imports and defence cooperation. Chinese warships are increasingly making use of Oman's Salalah Port for logistics during its anti-piracy operations.22 China also carries out regular naval exercises and port calls with Oman. Increasing Chinese presence in the Gulf of Oman and the wider Indian Ocean Region presents a challenge to India’s traditional maritime foothold in the region. Some reports suggest that China is planning to build a new naval base in Oman.23

Trade and Investment

Bilateral trade in the last decade has more than doubled from US$ 4.6 billion in 2012–1324 to around US$ 12.4 billion in 2022–23.25 During the Sultan's visit to India in 2023, talks also focussed on a comprehensive economic agreement, and the potential for bilateral rupee trade. Much of the substantive negotiations for the Comprehensive Economic Partnership Agreement (CEPA) between India and Oman have been finalised.26 Under such an agreement, in addition to simplifying regulations to promote trade in services and investments, the two countries can either significantly reduce or completely eliminate customs duties on a number of products traded between them. Such an agreement will help Indian industries including iron and steel, textiles, electronics and machinery to significantly increase their exports to Oman.27 Oman will become the second country in the region, after the UAE, to have signed a CEPA with India. An India–Oman CEPA will further boost the economic and strategic partnership between the two countries.

Oman’s FDI in India from April 2000 to December 2022 has crossed US$ 588 million, whereas Indian business establishments have investment over US$ 7.5 billion in Oman.28 An Oman–India Joint Investment Fund was created in 2011. The fund is backed by the Oman Investment Authority and the State Bank of India. The fund's initial two tranches were worth US$ 100 million and US$ 200 million, which are being invested in mid-market Indian companies in various sectors such as manufacturing, financial services, and business goods and services. The third tranche of the fund was announced by both countries during the Sultan’s India visit in 2023. The US$ 300 million fund seeks to direct investments towards the Indian economy's fastest-growing sectors.29

Energy Ties

Although Oman’s oil reserves are comparatively lower than its other GCC counterparts, except Bahrain, it has been an important source of crude oil for India. In 2022, India was the second-largest importer of Omani crude oil after China. In 2022–23, India imported petroleum products worth US$ 4.6 billion from Oman.30 There exists a considerable scope of enhancing Oman’s oil trade with India. Indian companies have also made investments in the energy sector in Oman. In 2018, Indian Oil Corporation Limited acquired a 17 per cent stake in Oman’s Mukhaizna oil field worth US$ 329 million.31

In 2014, India, Oman, and Iran began discussions on constructing an Iran–Oman–India deep-sea gas pipeline that would supply 31 million cubic metres of gas per day to India.32 This pipeline can provide India with an alternative to the Iran–Pakistan–India gas pipeline, which encountered multiple issues due to Pakistan's reluctance in fulfilling its obligations. Though discussions have taken place in building the Iran–Oman gas pipeline,33 no major progress has been achieved in this regard. If commissioned, the pipeline will help in boosting India's energy security significantly. In the future, exporting gas from other GCC countries to India can also be facilitated via such a pipeline from Oman.

Developing renewable energy capacity is another important goal for both Oman and India, with significant potential for cooperation. India has already commissioned large-scale renewable projects to fulfil its target of attaining 500 GW of non-fossil fuel based electricity capacity by 2030. Oman has set a target to produce 30 per cent of its energy requirements from renewable sources by 2030.34 Oman is also a member of the International Solar Alliance which was co-founded by India. An Indian renewable energy company ACME India Ltd has reached an agreement to invest US$ 3.5 billion over the next three years for the construction of Oman's first commercial green ammonia and green hydrogen manufacturing plant at the Duqm port.35

Ports and SEZs

Oman's future objective is to establish itself as a hub for transportation and logistics linking East Africa, West Asia and South Asia. Ports will play an enhanced role in securing such objectives. However, the cargo handling capacity of Omani ports are comparatively lower than that of its regional neighbours such as the UAE or Saudi Arabia. In August 2020, Oman established the Public Authority for Special Economic Zones and Free Zones which oversees the Special Economic Zones (SEZs) and Free Zones at Duqm, Al Mazunah, Salalah, Sohar and other upcoming zones. The SEZs were established in order to bring foreign capital, stimulate economic growth and foster a business-conducive environment.

The principal aim of establishing SEZs is to push the country's economy to become more diversified and less dependent on oil revenues, apart from generating jobs, creating infrastructure, and economic development. The SEZ at Duqm is among the largest in the world. Duqm’s location at the crossroads of Asia, Africa and as one of the busiest international trade routes overlooking the Indian Ocean makes it a strategic investment location for global players. Oman though requires enormous investments to scale up its ports infrastructure and SEZs in order to become a logistics and financial hub.

Oman has initiated talks with India’s Adani Group for developing the Duqm Port.36 An Indo-Oman joint venture, Sebacic Oman, is investing US$ 62.7 million to establish the largest sebacic acid plant in the region inside the Duqm SEZ.37 Furthermore, 'Little India' is an important consolidated tourism project being undertaken in the Duqm SEZ with financing from Indian businesses. The project will undoubtedly attract a sizable number of tourists due to its sheer size and scope, which will benefit tourism and its allied industries. These projects will significantly increase India's economic footprint within Oman.38 Indian investments in Sohar Port and Free Zone have exceeded US$ 2 billion.39 There is a lot of scope for India to increase its investments in the strategic projects of Oman’s SEZs, especially in Sohar and Salalah, which are cities with a significant Indian diaspora.

The Musandam Peninsula is an exclave of Oman strategically located at the southern tip of the Strait of Hormuz. The Government of Oman has invited bids to develop the Khasab port and the surrounding region in order to promote tourism.40 Any Indian investments streamlined into this region will hold significant strategic importance in the future. Oman requires large-scale foreign investments and technical assistance to develop its ports and SEZs which will aid in its economic diversification, in order to move away from a fossil-fuel based economy. India’s role in aiding Oman’s economic transformation is a key factor behind the increasing synergy between the two countries.

Conclusion

The strategic partnership between India and Oman is firmly based on shared interests and objectives. The Sultan’s maiden visit to India in December 2023 has added new momentum to the India–Oman relationship. Regular high-level bilateral engagements have been a hallmark of this relationship. Oman’s historic relations with India in addition to their maritime proximity and common security goals make India a trusted and privileged partner of Oman amid the changing regional and international geopolitical conditions.

As Oman diversifies its economy to transform itself into a major logistics and financial hub in the West Asian region, it stands to benefit immensely with enhanced cooperation with India. In addition to enhancing bilateral cooperation, the maritime, defence and economic ties between India and Oman have also promoted regional stability. The potential for strengthening economic cooperation, particularly in sectors such as ports, SEZs and renewable energy, offers a promising avenue for mutual growth. In a complex geopolitical setting, India and Oman's growing and multifaceted strategic partnership displays a shared commitment to regional peace and economic development.

Views expressed are of the author and do not necessarily reflect the views of the Manohar Parrikar IDSA or of the Government of India.