Context:

• ToR for initiating negotiations on a Free Trade Agreement (FTA) between India and the Eurasian Economic Union (EAEU) was signed on 20 August 2025 in Moscow.

Key Points:

• Signatories: On behalf of India, the ToR was signed by Ajay Bhadoo, Additional Secretary, Ministry of Commerce, and on behalf of the EAEU, by Mikhail Cherekayev, Deputy Director, Trade Policy Department, Eurasian Economic Commission (EEC).
• Objective: The ToR provides a framework for negotiations, including terms, scope, and procedures of the trade agreement. It aims to conclude the FTA at the earliest and establish an institutional framework for long-term trade cooperation.
• Significance: Part of India’s strategy to expand trade in non-Western markets and diversify export destinations in response to high tariffs imposed by the US.
• Trade Value: Bilateral trade between India and EAEU stood at USD 69 billion in 2024, up 7% from 2023.
• Major Trade Partner: Russia is India’s largest trading partner in the EAEU with bilateral trade of USD 68.72 billion in 2024-25 (exports: USD 4.88 billion, imports: USD 63.84 billion), largely due to crude oil imports from Russia.

Other EAEU Trade:

• Armenia: USD 315.18 million
• Belarus: USD 106.69 million
• Kazakhstan: USD 349.48 million
• Kyrgyz Republic: USD 56.78 million

• • Key Export Sectors: Pharmaceuticals, machinery, textiles, and agricultural products hold strong potential in EAEU markets.
  • Major Imports: Energy (crude oil), fertilizers, and defense equipment, mainly from Russia.

Market Access & Diversification:

• Export Opportunities: The FTA will give Indian exporters access to a market of 183 million people and a combined GDP of USD 6.5 trillion. Potential sectors: IT, engineering goods, and processed foods.
• Diversification: With the US imposing tariffs up to 50% on Indian goods (in response to Russian oil purchases), the FTA with EAEU will help reduce India’s dependence on Western markets.

Benefits to MSMEs:

• The FTA will provide MSMEs with a competitive edge in EAEU markets, boosting employment and economic growth in India.

Investment & Innovation:

• Negotiations under the ToR will focus on promoting investments and encouraging innovation, strengthening long-term economic partnership.

Geopolitical Significance:

• India–Russia Relations: Russia has been a reliable partner, especially in energy and defense. The FTA will further strengthen these ties amid rising trade tensions with the US.
• India’s Position in Eurasia: The FTA will enhance India’s economic and strategic footprint in Eurasia, where the EAEU serves as an alternative to the EU under Moscow’s leadership.

Eurasian Economic Union (EAEU):

• A regional economic organization promoting integration and cooperation across Eurasia.
• Established: 1 January 2015 (following the implementation of the EAEU Treaty, succeeding EurAsEC and the Customs Union).
• Members: Russia, Belarus, Kazakhstan, Kyrgyzstan, and Armenia.
• Observers: Uzbekistan and Cuba.
• Potential Expansion: Moldova, Tajikistan, and others have shown interest.

Structure:

• Eurasian Economic Commission (EEC): Executive body implementing trade policies, customs, and regulations; HQ in Moscow.
• Supreme Eurasian Economic Council: Heads of state of member countries; takes major policy decisions.
• Other Bodies: EAEU Court and Intergovernmental Council.

Economic Data (as of 2025):

• Combined GDP: ~USD 6.5 trillion (PPP basis).
• Population: 183 million.
• Resources: Russia & Kazakhstan – vast oil, gas, and minerals; Belarus & Armenia – agriculture & manufacturing.
• Trade: Global trade of EAEU near USD 900 billion in 2024, with Russia contributing the most.

Key Features:

1. Customs Union:

• No tariffs between member states.
• Common External Tariff (CET) applied on trade with non-members.

2. Free Movement:

• Free movement of goods, services, capital, and labor.
• Citizens can work visa-free across member states.

3. Economic Policy Coordination:

• Cooperation in energy, transport, and technical standards.
• Common market policies for agriculture & industry.

4. Currency Integration:

• Discussions on a common currency for the future (not yet implemented).

Free Trade Agreements (FTA)

• FTAs are agreements between two or more countries to boost trade and investment by reducing or eliminating tariffs, import duties, and non-tariff barriers.

India’s Major Trade Agreements: