INDIA-EURASIAN ECONOMIC UNION (EAEU) FREE TRADE AGREEMENT (FTA)

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Context

India and the Eurasian Economic Union (EAEU) have signed the Terms of Reference (ToR) to launch negotiations on a Free Trade Agreement (FTA).

India–EAEU Trade Talks Explained

India and the Eurasian Economic Union (EAEU) signed a Terms of Reference (ToR) on August 20, 2025 in Moscow to start formal Free Trade Agreement (FTA) negotiations.

This move came after India’s talks with the US stalled and Washington threatened steep tariffs on Indian imports (50%, with extra duties on Russian oil).

• Facing these pressures, India is shifting toward a multipolar strategy, strengthening ties with Russia, China and other partners.

The Commerce Ministry says the FTA with the EAEU (combined GDP $6.5 trillion) will expand Indian market access, diversify exports and help small businesses.

What Is the EAEU?

The Eurasian Economic Union is a customs/trade bloc formed in 2014.

Its five members are Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan.

It works like a single market with free movement of goods, services, capital and people among members.

Its main bodies include a Supreme Council of heads of state, an Economic Commission (based in Moscow), and a Court (in Minsk).

The EAEU was created as a Russian-led alternative to the EU’s Eastern Partnership, to coordinate policies across member countries.  

India–EAEU Trade Status

In 2024-25, bilateral trade was about $69 billion, up 7% from 2023. However, this trade is highly unbalanced. Almost all of it is with Russia: around $68.7 billion. 

• Bilateral trade with Armenia, Belarus, Kazakhstan, and Kyrgyzstan was $315.18 million, $106.69 million, $349.48 million, and $56.78 million, respectively.

Most of India’s imports from the EAEU are energy and raw materials. Russia is a major oil and coal supplier.

• After the 2022 Ukraine war, India started buying heavily discounted Russian crude oil. Currently over 35% of India’s oil imports come from Russia.
• Other EAEU imports include fertilizers and steel.

India’s exports to the EAEU – machinery, pharmaceuticals, tea and electronics among them.

• India runs a large trade deficit with the EAEU.
• In 2024, India imported about $63.8 B from Russia vs only $4.9 B of exports.

Strategic Significance for India in opening FTA talks with the EAEU

New market access: Provide preferential access to over 180 million consumers in Central/Eastern Europe and Central Asia.

• With tariffs lowered, Indian exporters (especially small and medium enterprises) could increase sales of goods like pharmaceuticals, textiles, and IT services.
• For example, an FTA with the UK (July 2025) now gives duty-free access to 99% of Indian exports, a template for securing similar access in EAEU markets.

Energy security: A formal trade pact provide more reliable oil and gas supplies from Russia and Kazakhstan at lower prices.

• India could sign long-term contracts and build strategic reserves of discounted oil, reducing dependence on Middle East suppliers, “support diversification” of energy sources.

Export diversification: India wants to reduce reliance on a few export markets (like the US and EU). An EAEU pact opens opportunities for sectors under-exported so far.

• India could grow exports of pharmaceuticals, machinery and agro-products to the region if tariffs are cut.  

Geopolitical balance: Engaging the EAEU fits India’s multi-alignment strategy.

• It strengthens ties with Russia and Central Asia, balancing relations with the US and China. By shifting to Eurasian markets, India signals strategic autonomy.
• India has already “started a fresh step towards China, Russia and Brazil” in face of US pressure, and EAEU provides India a gateway to Central Asia, aiding connectivity projects like the International North-South Transport Corridor (linking India–Iran–Russia).

MSME boost: Lower tariffs would help small exporters reach EAEU customers. For example, India and UAE signed Comprehensive Economic Partnership Agreement (CEPA) in 2022, bilateral trade increased to $83.7 billion in FY24, from $43.3 billion in FY21. A similar success is hoped for EAEU.

Challenges and Risks

High trade deficit: India’s imbalance (exports < imports) is extreme.

• In 2024, India imported $59 B more than it exported to the EAEU.
• Indian industries raised concern over cheap Russian/EAEU imports (oil, metals, etc), need for protecting domestic producers (with safeguards or quotas) once liberalization starts.

Sanctions exposure: Deepening trade with Russia carries geopolitical risk. The US and EU have imposed tough sanctions on Russia over Ukraine, including restrictions on banking (SWIFT) and industries.

• India already faces US threats: in 2025 Washington raised tariffs on Indian goods to 50% (including a 25% “penalty” on oil from Russia). If India imports more Russian oil through the FTA, it could face further Western pressure.
• India is trying to manage this by shifting to rupee-ruble trade: in Aug 2025, the RBI eased rules so banks can open rupee accounts for Russian partners. Still, a big challenge is ensuring compliance with global sanctions while advancing trade.

Implementation barriers: Negotiating an FTA means aligning standards, rules of origin, certification, customs procedures, etc. Indian businesses – especially small exporters –are not ready for these changes.

• They will need to adapt to EAEU technical standards and regulations. Also, language/cultural differences and limited transport links could slow actual trade growth.

Low FTA utilization: According to Asian Development Bank, less that 25% of Indian exports actually use FTA benefits, far below the developed countries (70-80%). If Indian companies don’t apply the tariff concessions (due to paperwork or unawareness), the FTA’s gains will be muted.

Geopolitical sensitivity: A trade deal with a Russia-led bloc may alarm allies. NATO and Western partners could question India’s commitment.

• India must balance strategic autonomy with alliance pressures.
• India have to conduct tight compliance reviews and carve-outs so that an EAEU FTA doesn’t jeopardize relations with the US/EU.

Way Forward for India–EAEU FTA   

Phased liberalization: Start with non-sensitive goods (e.g. chemicals, electronics, services) and delay opening agriculture or defense items until safeguards are in place, provide Indian industry time to adjust.

Safeguard clauses: Include automatic triggers (e.g. increase in imports), anti-dumping duties, and safeguard measures to protect domestic firms if cheap imports surge unexpectedly.

Strict rules of origin: Ensure products labeled “Made in EAEU” really add value in those countries, to avoid third-country transshipment. Certification should be robust so only qualified goods get tariff cuts.

Sector-specific deals: Negotiate sub-agreements. For example, India could push for mutual recognition of pharma standards, or simpler certification for IT and textiles. This helps key sectors quickly access the EAEU.

Payment and logistics solutions: Explore new payment systems (blockchain, digital currency) to bypass SWIFT.

• Improve transport links (like the International North-South Corridor) to cut shipping time to Russia/Central Asia.

Trade facilitation: Simplify customs procedures, use e-certificates of origin, and set up an India–EAEU Joint Committee to resolve issues quickly.

Awareness and support: Inform businesses (especially MSMEs) about the FTA benefits. Provide training on standards and export procedures.

Conclusion

India's FTA talks with the Eurasian Economic Union represent a strategic move to boost trade with Russia and its allies, secure vital resources, and expand market access.

Source: NEWSONAIR