India Initiates Free Trade Agreement Talks with Russia-Led EAEU
India has signed Terms of Reference with the Eurasian Economic Union (EAEU) in Moscow, initiating negotiations for a Free Trade Agreement. The EAEU, comprising Russia, Kazakhstan, Armenia, Belarus, and Kyrgyzstan, has a combined GDP of $6.50 trillion. Trade between India and EAEU reached $69.00 billion in FY 2023-24, a 7% increase year-on-year. Russia remains India's top trading partner within EAEU. The potential FTA aims to expand market access for Indian exporters, support sector diversification, boost MSME growth, and increase bilateral investments.
*this image is generated using AI for illustrative purposes only.
India has taken a significant step towards expanding its global trade footprint by signing Terms of Reference (ToR) with the Eurasian Economic Union (EAEU) in Moscow, paving the way for negotiations on a Free Trade Agreement (FTA). This move signals India's intent to strengthen economic ties with the EAEU, a bloc comprising Russia, Kazakhstan, Armenia, Belarus, and Kyrgyzstan.
Key Highlights
- The ToR was signed by Ajay Bhadoo, representing India's Department of Commerce, and Mikhail Cherekaev from the Eurasian Economic Commission.
- Trade between India and the EAEU reached $69.00 billion in FY 2023-24, marking a 7% year-on-year increase.
- Russia remains India's top trading partner within the EAEU, with bilateral trade figures showing Indian exports at $4.26 billion and imports at $61.43 billion in FY 2023-24.
Potential Benefits of the FTA
The proposed Free Trade Agreement aims to unlock several opportunities for India:
- Expanded Market Access: Indian exporters are expected to gain improved access to the EAEU market, which boasts a combined GDP of $6.50 trillion.
- Sector Diversification: The agreement could support India's efforts to diversify into new sectors and geographical markets.
- MSME Growth: Micro, Small, and Medium Enterprises (MSMEs) in India are anticipated to benefit from increased trade opportunities.
- Increased Investments: The FTA is expected to boost bilateral investments between India and EAEU member countries.
Economic Implications
The initiation of FTA talks with the EAEU is a strategic move for India, considering the bloc's significant economic heft. With a combined GDP of $6.50 trillion, the EAEU represents a substantial market for Indian goods and services. The agreement has the potential to tap into unexplored trade avenues and foster stronger economic ties between India and the five EAEU member states.
Current Trade Scenario
The existing trade relationship between India and the EAEU is already robust, as evidenced by the $69.00 billion trade volume in FY 2023-24. This figure represents a 7% growth compared to the previous year, indicating a positive trajectory in economic relations. Russia's dominant position in this trade partnership is clear, accounting for the lion's share of both Indian exports and imports within the EAEU context.
Looking Ahead
As negotiations commence, both parties will work towards creating a mutually beneficial trade framework. The successful conclusion of this FTA could reshape India's trade dynamics with Eastern Europe and Central Asia, potentially opening up new corridors for economic cooperation and cultural exchange.
While the road to a finalized FTA may be complex, involving detailed negotiations on tariffs, trade barriers, and regulatory alignment, the signing of the Terms of Reference marks a crucial first step in this journey. Stakeholders on both sides will be keenly watching the progress of these talks, as they could herald a new chapter in India's engagement with the Eurasian region.
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