India and EAEU Sign ToR to Start Free Trade Agreement Talks

Eurasian Economic Alliance (EEA)

The Eurasian Economic Union (EAEU) is a regional economic integration entity with international legal status.

The aim is to improve collaboration, increase competitiveness, and assist the steady growth of member economies.

It guarantees the unrestricted flow of goods, services, capital, and labor while seeking aligned policies among its members.

Members: It includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia.

Membership in the Union is accessible to any state that aligns with the EAEU's goals and principles, based on terms established by Member States.

Advantages

The suggested FTA is anticipated to broaden market access for Indian exporters, aid in diversification into new sectors and regions, improve competitiveness against non-market economies, and provide substantial advantages to Micro, Small, and Medium Enterprises (MSMEs).

Obstacles

Trade between India and Russia has surged considerably since Russia invaded Ukraine in 2022, with Russia now making up 35–40% of India's oil imports, a rise from less than 2%.

Nonetheless, India's exports to Russia have seen only a slight rise, resulting in a trade deficit that surpasses $60 billion.

To tackle this, India is reassessing rupee-ruble trade systems following previous unsuccessful attempts, whereas Russia-China trade has effectively transitioned to local currencies.

India encounters high tariffs from the US, driving exporters to explore alternative markets such as Russia for textiles and pharmaceuticals. At present, India primarily sells engineering products, electronics, and pharmaceuticals to Russia.

Reports indicate that escalating US tariffs—possibly hitting 50%—might significantly affect Indian exports.