Oman and India demonstrate the strategic power of economic statecraft |
In an era marked by geopolitical fragmentation, sanctions regimes, trade wars, and military standoffs, states are increasingly rediscovering the strategic value of economic tools. The recent Comprehensive Economic Partnership Agreement (CEPA) between Oman and India stands as a textbook example of how economic statecraft can serve national interests more effectively-and more sustainably-than coercive or militarized approaches. By prioritizing trade liberalization, investment facilitation, and market access, both countries are demonstrating how “carrots” rather than “sticks” can reshape bilateral relations while enhancing strategic autonomy in an uncertain global environment.
The CEPA signed between Oman and India offers duty-free access to more than 98 percent of India’s exports to Oman, while India has agreed to liberalize tariffs on nearly 77.8 percent of its total tariff lines, covering over 94 percent of imports from Oman by value. Bilateral trade between the two countries reached approximately $10.6 billion in 2025, reflecting a steady upward trajectory. More than 6,000 India–Oman joint ventures already operate in the sultanate, and India’s outward foreign direct investment (FDI) in Oman stands at around $675 million. The agreement aims to further boost India’s exports of textiles, engineering goods, pharmaceuticals, and agricultural products, while granting Oman improved access to the vast Indian market for products such as dates and petrochemicals.
This development is not merely a commercial transaction; it is a strategic maneuver rooted in the logic of economic statecraft. In his seminal 1985 book Economic Statecraft, political scientist David Baldwin reexamined the effectiveness of economic tools as instruments of foreign policy. Baldwin defined statecraft as the methods states use to influence the behavior of other actors in the international system, emphasizing that economic instruments occupy a crucial space between diplomacy and military force. These instruments include positive measures-“carrots”-such as aid, investment, trade preferences, and subsidies, as well as negative measures-“sticks”-such as sanctions,........