India has expressed its interest in the latest trade data from the five member nations of the Eurasian Economic Union (EAEU) as the two sides aim to begin discussions on a potential free-trade agreement (FTA), as stated by individuals familiar with the matter.
The EAEU consists of five countries – the Russian Federation, Kazakhstan, Belarus, Armenia, and Kyrgyzstan. Among these countries, Russia stands as the largest, both in terms of land area and trade partnership, with a notable 98% share in the trade volume of 2022-23.
Establishing this agreement would significantly bolster the existing commercial relationship between India and Russia.
According to an informed source, the initial phase of discussions is already underway, while India has sought the most recent trade data from the five countries to conduct its evaluation.
Although these discussions have been ongoing for some time, progress is taking longer than expected. Another source added that India and Russia are concurrently addressing non-trade barriers impacting Indian exporters, particularly in sectors such as pharmaceuticals. The speed at which talks progress may depend on the resolution of these particular issues.
India and the EAEU initially planned to set the agenda for trade negotiations and finalize the structure of the joint text for the trade agreement in Moscow in March 2020. However, due to the outbreak of the Covid-19 pandemic, these plans were postponed.
In January of the following year, the two sides agreed on the terms of reference for the proposed trade agreement. Unfortunately, progress was hindered by the Russia-Ukraine conflict. Experts argue that signing a trade agreement with the EAEU will not be an easy task, as it requires careful strategic considerations, particularly in light of the ongoing conflict between Russia and Ukraine.
According to the data from the commerce department, India’s overall trade with the EAEU during 2022-23 amounted to $50.3 billion. Out of this figure, trade with Russia alone accounted for $49.3 billion, followed by Kazakhstan with $641.6 million, Armenia with $135.3 million, Belarus with $111.8 million, and Kyrgyzstan with $56.6 million.
The trade balance between India and Russia has been affected by the significant reliance on discounted crude oil, resulting in a trade deficit of $43 billion for India in the same period. Although Indian exports to Russia reached a modest $3.1 billion in FY23, steps need to be taken to address the trade deficit, as highlighted by India’s External Affairs Minister, S Jaishankar. He has flagged concerns over market access, non-tariff barriers, and logistics-related issues and has pledged to collaborate with Russia to find solutions.
