India, Eurasian Economic Union FTA to boost trade manifold

In recent years, the economic ties between India and the Member States of the Eurasian Economic Union have witnessed substantial growth. This progress has been notably driven by India's comprehensive economic reform initiatives in the past year and the increased integration processes within the EAEU Member States. Furthermore, the EAEU region boasts abundant natural resources, particularly energy resources, marked by significant production and exports, whereas India continues to be a net importer of these vital energy resources.
The Eurasian Economic Union (EAEU) has opted to accelerate the approval process for the envisioned free trade agreement with India. This agreement aims to provide Indian companies with entry into the resource-abundant Eurasian market, an area witnessing significant Chinese influence. 
The EAEU is composed of Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan.
India and the EAEU are in the process of formulating an industrial cooperation plan to enhance collaboration across diverse sectors. This roadmap for industrial alignment serves as a preliminary step toward the prospect of establishing a Free Trade Agreement.
Russia and India have engaged in extensive discussions on various matters related to collaboration and the expansion of industrial cooperation. These talks have encompassed joint exhibitions, thematic forums, and the exchange of experiences, particularly within specific technologies and business domains. This highlights the concerted efforts of both nations to synchronize their industrial sectors for mutual benefit.
India has engaged in multiple bilateral meetings with the Eurasian Economic Union to deliberate on the Trade Agreement, exchanging draft texts and Terms of Reference (ToR).
Notably, India has witnessed a growth in exports to Russia and Belarus during the current financial year until October 2023. As part of a continuous effort to boost exports, India is strategically focusing on expanding its presence in growing sectors like agriculture and engineering.
The Federation of Indian Exporters Organisation (FIEO) highlights the historical trade ties between India and the erstwhile USSR, emphasizing a robust relationship. However, post the USSR's dissolution, trade experienced a notable decline, particularly among the disintegrated regions.
Recognizing the potential opportunities in Russia and other Eurasian countries, India is targeting various sectors such as food and agricultural products, engineering, electronics, telecom, technology, leather, and textiles to enhance its trade relations in these regions.
"The trade turnover between the EAEU countries and India doubled at year-end 2022, and increased by another 90% in H1 2023 compared to the same period last year. Along with that, preliminary studies demonstrate significant benefits from concluding a free trade agreement for both the EAEU and India, including from the perspective of possible implementation of future joint projects. The business community of the Union countries actively supports the transition to preferential treatment as well," noted Vladimir Serpikov, Director of the EEC Trade Policy Department.
This FTA is anticipated to enhance New Delhi's exports to the region, particularly in sectors such as engineering goods, electronics, and agriculture, contributing to a more balanced trade relationship. During a meeting in Moscow, External Affairs Minister S Jaishankar and Russian Deputy Prime Minister Denis Manturov explored ways to deepen India's involvement in the Russian Far East, including the commencement of negotiations for the proposed FTA.
“Finalised the programme of cooperation on Russian Far East. Expect to hold early meeting of EaEU-India FTA negotiators. Will jointly organise connectivity events across land and maritime corridors,” Jaishankar tweeted following his meeting with Manturov.
Conversations regarding the suggested Free Trade Agreement (FTA) involving India and the Eurasian Economic Union, which includes the Russian Federation, Kazakhstan, Belarus, Armenia, and Kyrgyzstan, were initiated in early 2020. However, due to the Covid-19 pandemic, these discussions had to be temporarily halted. In recent months, discussions on the FTA have recommenced, but formal negotiations are still pending.
India is keen on boosting its exports to Russia, aiming to address a significant trade gap that has widened considerably. The surge in imports, particularly discounted oil, from Russia following the Russia-Ukraine war and Western sanctions on Moscow has contributed to this imbalance.
During the fiscal year 2022-23, India experienced a substantial 368 percent year-on-year increase in imports from Russia, reaching US$46.2 billion, primarily driven by heightened oil purchases. However, the country's exports during the same period decreased by 3.3 percent to US$3.14 billion. Consequently, the trade deficit for 2022-23 amounted to US$43 billion.
Russia is actively seeking to boost imports from India to ensure the success of the rupee payment mechanism established by both nations as a strategic measure to circumvent sanctions. The accumulation of Russia's rupee balance in the account is attributed to the current low levels of imports from India.

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