 "What is Russia-led Eurasian Economic Union with which India is talking trade?")
After signing a free trade agreement (FTA) with the United Kingdom , India is continuing to negotiate trade deals. New Delhi is currently in talks with the Eurasian Economic Union (EAEU).
India and the EAEU in Russia signed the terms of reference to open negotiations for an FTA. The development comes in the backdrop of a bilateral deal between India and the United States being stalled – much to the frustration of US President Donald Trump and his top officials.
But what do we do about the Eurasian Economic Union? Why is it increasingly important to India?
Let’s take a closer look
What is the EAEU?
First let’s take a brief look at the EAEU.
The bloc comprises Armenia, Belarus, Kazakhstan, Kyrgyz Republic and the Russian Federation. It was established via the Treaty on the Eurasian Economic Union, which was signed in Kazakhstan in May 2014 and took effect in January 2015.
Its website described its objective as facilitating “the free movement of goods, services, capital, and labour” among its members. It also coordinates and harmonises policies across sectors. Cuba, Moldova and Uzbekistan have all been granted observer status in the EAEU, while there have been discussions about admitting Azerbaijan.
It is the successor to the Eurasian Customs Union, which was formed in 2010 and comprised Russia, Belarus, and Kazakhstan as well as the Single Economic Space, which was established in 2012. These groups were founded as a response to both the 2008 financial crisis the EU Eastern Partnership Policy (EaP), which was launched in 2010.
Moscow at the time wanted to present an alternative to the European Union, which it viewed as impinging on its sphere of influence. The Eurasian Customs Union became the Eurasian Economic Union after Armenia joined the bloc.
Interestingly, Russia also tried to get Ukraine to join the grouping but failed. This, in fact, let to protests in Ukraine in 2014 and the ouster of the then Ukrainian President Viktor Yanukovych, whom many in Kyiv derided as a Russian crony. Russia would later invade Crimea that very same year. Kyrgyzstan, an ally of Kazakhstan, joined the block in August 2015.
The bloc has a combined GDP of $6.5 trillion. It accounts for around 2.2 per cent of the world’s population – around 180 million people. The Eurasian Economic Commission (EEC), its main agency and regulatory body, comprises all members states and is based in Moscow.
The EEC comprises 10 members – two ministers from each member state. One of the members acts as the body’s chairman. It also has a Eurasian Economic Union Court, which is based in Minsk. However, Russia being the largest member of the bloc by far, easily dominates proceedings.
Why EAEU is increasingly important to India
Trade between India and the EAEU stood at $69 billion in 2024. That figure was a seven per cent increase over 2023, according to data from the commerce ministry.
India and the Eurasian Economic Union (EAEU) signed the terms of reference (TOR) to launch on Wednesday (August 20) in Moscow. The TOR provides a frame of reference on which negotiations can be built.
India has been discussing a free trade agreement with the EAEU since 2017. Talks between India and the grouping stalled after the outbreak of the Ukraine war. It revived in July 2014 during the 22nd annual bilateral summit between Russia and India in Moscow. President Vladimir Putin and Prime Minister Narendra Modi at the time expressed a willingness to sign an FTA. Chief negotiators from both sides held a virtual meeting in January.
New Delhi has now seemingly turning towards Russia and China after a fallout with Trump, who called both India and Russia ‘dead economies’. Modi will likely meet Chinese President Xi Jinping during his visit to China later this month. He has already spoken to Brazilian President Lula da Silva and Russian President Vladimir Putin.
The bloc has grown more important for India in recent years because of New Delhi’s increasing reliance on Moscow for oil. Prior to the Ukraine war, India bought negligible amount of oil from Russia – preferring to rely on its traditional sources in West Asia. However, today Russia comprises over a third of India’s crude oil imports.
“India and the EAEU comprising Armenia, Belarus, Kazakhstan, Kyrgyz Republic and the Russian Federation signed the Terms of Reference (ToR) to launch negotiations on a Free Trade Agreement (FTA) today in Moscow. The ToR was signed by Additional Secretary, Department of Commerce Ajay Bhadoo, and Deputy Director, Trade Policy Department, EEC, Mikhail Cherekaev,” the commerce and industry ministry said.
“With a combined GDP of $6.5 trillion, the proposed FTA is expected to expand market access for Indian exporters, support diversification into new sectors and geographies, enhance competitiveness against non-market economies, and deliver significant benefits to Micro, Small and Medium Enterprises (MSMEs),” the commerce ministry statement read.
“Both sides reaffirmed their commitment to the early conclusion of the agreement and to building a long-term institutional framework for trade cooperation,” it added.
Other FTAs on horizon
India isn’t just talking to the EAEU. In fact, India is considering stitching together separate deals with the European Union, Oman, Chile and Peru.
Talks with Oman have ended and the trade deal is expected to be signed soon. Discussions between India and the European Union are slated for September.
Meanwhile, the FTA between India and the United States has seemingly hit a roadblock. T rump, who has imposed a hefty tariff on India for buying Russian oil and trading with Moscow, has refused to further negotiate until India stops doing so.
India has head back at the United States claiming that the tariff is unfair , unjust and unreasonable. New Delhi has also pointed to hypocrisy on the part of the US-led West and the European Union for their own dealings with Russia. Moscow has said that every independent nation deserves to choose its trading partners.
New Delhi has vowed never to compromise on the national interest while negotiating a free trade deal . Prime Minister Narendra Modi, addressing the tariffs last week , said he was willing to pay a political price in order to protect the farmers.
The United States wants India to open up its sensitive agriculture and dairy sector. However New Delhi has refused to do so, saying it could negatively impact millions of small-scale farmers.
With inputs from agencies
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