India-EAEU Free Trade Agreement Talks Intensify Ahead of Putin's Visit to Boost Bilateral Trade

India and the Eurasian Economic Union (EAEU), a bloc comprising Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan, are rapidly advancing discussions for a Free Trade Agreement (FTA). This intensified engagement precedes Russian President Vladimir Putin's upcoming visit to India. A central theme of these negotiations is the establishment of a time-bound roadmap for crucial sectors including pharmaceuticals, telecommunications equipment, machinery, leather, automobiles, and chemicals.

The primary motivation for New Delhi is to address and reduce its substantial trade deficit with Russia, which surged to approximately $59 billion in FY25. The proposed FTA is anticipated to significantly bolster India's export volumes to the EAEU market. Current bilateral trade figures for FY25 show total trade at $68.69 billion, with India's imports from Russia, predominantly crude oil, valued at $63.81 billion, while India's exports to Russia were a mere $4.88 billion.

Commerce Secretary Rajesh Agrawal conducted a series of meetings in Moscow to oversee the progress of the India-EAEU FTA negotiations. During his visit, he met with Andrey Slepnev, the Minister in charge of Trade of the Eurasian Economic Commission, and Mikhail Yurin, Deputy Minister of Industry and Trade of the Russian Federation. He also participated in a business networking session with representatives from Indian and Russian industries.

This FTA is also seen as a vital step for market diversification for Indian exporters, particularly as high US tariffs make it challenging to ship goods to the United States.

Prime Minister Narendra Modi and President Putin are expected to review the progress made by both nations towards their target of achieving $100 billion in bilateral trade by 2030, and are likely to discuss the potential FTA during their bilateral meeting scheduled for December.

As part of the agreement, both sides have committed to quarterly regulator-to-regulator engagement. This will help resolve issues related to certification requirements, the listing of agricultural and marine businesses, and the prevention of monopolistic practices, among other non-tariff barriers.

President Putin himself has acknowledged the need to rectify the trade imbalance and has tasked his officials with identifying the most promising avenues for increasing procurement of goods such as agricultural products and pharmaceuticals from India.

The Russian government is also actively encouraging Indian business delegations to explore opportunities across various sectors like processed and packaged food, marine products, beverages, engineering goods, consumer electronics, and household goods.

Impact

This strategic move towards an FTA with the EAEU bloc has significant implications for Indian businesses, offering a pathway to expand their global footprint and mitigate trade imbalances. Increased trade activity in key sectors could lead to greater investment, job creation, and stronger economic ties between India and the EAEU members. It also serves as a crucial step in India's strategy to diversify its export markets and enhance its economic resilience.

Impact Rating: 7/10

Difficult Terms Explained:

Eurasian Economic Union (EAEU): A regional economic organization consisting of Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan, aimed at facilitating the free movement of goods, services, capital, and labor among its member states.

Free Trade Agreement (FTA): An international accord between two or more countries to eliminate or reduce barriers to trade, such as tariffs and quotas, promoting easier commerce.

Trade Deficit: A situation where a country's imports exceed its exports, resulting in a negative balance of trade.

Bilateral Trade: Trade conducted between two specific countries.

Crude Oil: Unrefined petroleum, a primary commodity traded globally and a major component of India's imports from Russia.

Regulator-to-regulator engagement: Direct communication and cooperation between the official regulatory bodies of different countries to harmonize standards and resolve issues.

Certification Requirements: Standards and official approvals that products must meet to be legally sold or distributed in a particular market.

Monopolistic Practices: Business behaviors that unfairly restrict competition, often by dominating a market.