India Gears Up for Major Trade Boost: FTA Talks with Russia-Led EAEU Advance!

India Set to Advance Free Trade Agreement Talks with Eurasian Economic Union

India is preparing to move forward with negotiations for a Free Trade Agreement (FTA) with the Russia-led Eurasian Economic Union (EAEU). This significant development is expected to be a key focus during Russian President Vladimir Putin's visit to New Delhi on December 4, signaling a strategic effort to deepen economic ties.

Boosting Bilateral Trade Prospects

• The primary objective of these advancing talks is to substantially increase bilateral trade, with a shared ambition to reach $100 billion by the year 2030.
• India's goods exports to Russia stood at $4.88 billion in FY 2024-25, indicating substantial potential for growth.

Focus on Key Export Sectors

• India aims to enhance its export volumes in critical sectors including pharmaceuticals, chemicals, engineering goods, machinery, automotive, agricultural products, and marine goods.
• Efforts will be made to address over 65 identified non-tariff barriers that currently affect India's marine exports to the EAEU bloc.

Addressing Trade Barriers and Sensitivities

• Specific challenges for India's pharmaceutical exports to the EAEU have been highlighted, including issues with registration processes, clinical trials, market access, and price registration.
• Discussions are anticipated to focus on mutual sensitivities and identifying products where trade expansion is a priority.
• Government sources indicated that India is not keen on including gold and precious metals within the scope of this proposed trade deal.

Exploring a Separate Services Pact

• Beyond the EAEU bloc's customs union framework, India is exploring the possibility of negotiating a distinct services trade agreement exclusively with Russia.
• This initiative acknowledges that trade deals within customs unions often exclude the services sector.

EAEU Member States and Negotiation Scope

• The Eurasian Economic Union comprises Russia, Kazakhstan, Armenia, Belarus, and Kyrgyzstan, with observer status granted to Cuba, Moldova, and Uzbekistan.
• The FTA negotiations are expected to cover crucial areas such as customs administration, e-commerce, intellectual property rights (IPR), sanitary and phytosanitary measures, tariffs, and technical regulations.

Preceding Steps and Related Initiatives

• Formal FTA negotiations with the EAEU were officially launched on November 26 in New Delhi.
• This followed the signing of the Terms of Reference (ToR) for the agreement on August 20 in Moscow.
• In related economic cooperation efforts, Indian and Russian central banks are discussing a settlement mechanism using local currencies.
• Furthermore, an agreement on labor mobility between India and Russia has been finalized and is undergoing due process for signing.

Impact

• This potential Free Trade Agreement could unlock significant new export opportunities for Indian businesses within the EAEU market, contributing to reduced trade deficits and overall economic expansion. It also serves to strengthen diplomatic and economic relationships.
• Impact rating: 6

Difficult Terms Explained

• FTA (Free Trade Agreement): An agreement between two or more countries to reduce or eliminate barriers to trade and investment among them, promoting easier commerce.
• EAEU (Eurasian Economic Union): An economic union of states located primarily in Northern Eurasia, functioning as a customs union and common market.
• Customs Union: A type of trade bloc where member countries eliminate tariffs among themselves and apply a common external tariff on goods from non-member countries.
• Non-tariff Barriers: Trade restrictions that are not taxes, such as quotas, import licensing, or complex regulations, which can hinder imports.
• Terms of Reference (ToR): A document that defines the scope, objectives, methodology, and deliverables of a project or negotiation.
• Sanitary and Phytosanitary Measures: Regulations designed to protect human, animal, or plant life or health from risks arising from pests or diseases, often relating to food safety.
• IPR (Intellectual Property Rights): Legal rights granting creators exclusive control over their creations, such as patents, copyrights, and trademarks.