On 20th August, India and the Eurasian Economic Union (EAEU), headed by Russia, started trade talks after United States President Donald Trump referred to India and Russia as “dead economies“. Donald Trump also increased tariffs on Indian goods to 50% for buying Russian Oil, among the highest in the world.
EAEU, which consists of Russia, Armenia, Belarus, Kazakhstan and the Kyrgyz Republic, has a GDP of $6.5 trillion. Furthermore, Cuba, Moldova and Uzbekistan have been granted observer status. Russia is India’s top trading partner in the bloc.
The Terms of Reference (ToR) to begin free trade agreement (FTA) negotiations were agreed in Moscow. “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),” informed Commerce Department.
According to the statement, the Terms of Reference (ToR) offers the framework for talks and is anticipated to boost investments, open up unrealised trade potential, and create a more robust and long-lasting India-EAEU economy. Mikhail Cherekaev, Deputy Director, Trade Policy Department of Eurasian Economic Commission (EEC) and Ajay Bhadoo, Additional Secretary for Commerce, signed the deal.
Bhadoo also met Andrei Slepnev, the EEC’s Minister in Charge of Trade. India and the EAEU’s expanding trade turnover which was USD 69 billion in 2024 and represented a 7% rise over 2023 was also highlighted by both parties. The early completion of the agreement and the establishment of a long-term institutional framework for trade cooperation were reaffirmed by both sides.
The official statement noted, “The heads of negotiation groups apprised the Minister about the milestone achieved with the signing of the ToR and discussed next steps to formally launch the negotiation process, including organisational aspects of the future trade deal.”
The Covid-19 pandemic forced the suspension of talks on the proposed free trade agreement (FTA) between India and the EAEU which had begun in early 2020. After the pandemic ended, discussions on the FTA then restarted, although formal talks are still pending. On 9th January chief negotiators from both sides convened virtually.
Meanwhile, External Affairs Minister S Jaishankar will meet with Russian colleague Sergei Lavrov on 21st August in Moscow. The former previously spoke at the India-Russia Inter-Governmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation (IRIGC-TEC) and met with Denis Manturov, Russia’s first deputy prime minister.
Jaishankar’s trip to Russia took place barely two weeks after Ajit Doval, India’s national security adviser, travelled to Moscow for a high-level visit aimed at fostering closer relations between the two countries.
The recent developments and the bustling engagement in the relationship between Russia and India, along with the positive attempts to restore relations with China have transpired amid the harsh criticism aimed at the Modi administration by the United States for purchasing Russian oil to protect Indian interests.
The Trump administration not only accused New Delhi of being responsible for the war in Ukraine but also imposed a 50% tariff while preparing to introduce further tariffs on India. On the other hand, they exempted China, the largest purchaser of Russian oil and even defended this apparent hypocrisy.
Moreover, the United States started to cultivate closer ties with Pakistan in an effort to provoke India and started attacking Indian businessmen especially, Gautam Adani and Mukesh Ambani.
