India restarts trade deal talk with Russia-led EAEU bloc amid Trump's tariffs, ‘dead economies' jibe
The restart of trade negotiations with EAEU, which has a combined GDP of $6.5 trillion, comes after New Delhi has ostensibly begun a pivot towards China, Russia and Brazil in the face of US economic coercion. After the fallout with the US over trade deal negotiations, Prime Minister Narendra Modi has held phone calls with Brazilian President Lula da Silva, Russian President Vladimir Putin and is expected to meet Chinese President Xi Jinping later this month.
The trade deal talks with EAEU were stalled in early 2022 after the Ukraine war. The grouping comprises Armenia, Belarus, Kazakhstan, Kyrgyz Republic, apart from Russia.
'India and the EAEU comprising Armenia, Belarus, Kazakhstan, Kyrgyz Republic and the Russian Federation signed the Terms of Reference (ToR) to launch negotiations on a Free Trade Agreement (FTA) today in Moscow. The ToR was signed by Additional Secretary, Department of Commerce Ajay Bhadoo, and Deputy Director, Trade Policy Department, EEC, Mikhail Cherekaev,' the commerce and industry ministry said.
The ministry said that the ToR provides the framework for negotiations and is expected to unlock untapped trade potential, increase investments and establish a stronger, durable India–EAEU economic partnership. 'Both sides reaffirmed their commitment to the early conclusion of the agreement and to building a long-term institutional framework for trade cooperation,' the ministry said in a statement.
The trade turnover between India and the EAEU stood at $69 billion in 2024, a 7 per cent increase over 2023. '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),' the ministry said.
Challenges in Russia-India trade
The India-Russia trade dynamics have undergone significant changes following the Ukraine war. While India's exports to Russia have only doubled from $2.39 billion in FY19 to $4.88 billion in FY25, India's imports from Russia have skyrocketed. Russia is now India's largest oil import source, widening the trade deficit to over $60 billion.
To balance the trade with Russia, India has also restarted taking measures to ease rupee-ruble trade. Talk of setting up rupee-ruble trade with Russia collapsed last year. Government officials said that fresh talks have begun. In contrast, Russia-China have set up a mechanism for trade in domestic currency, reducing the reliance on the US dollar.
With India facing steep US tariffs, exporters are looking for newer markets. Exporters said that Russia is a key market for Indian textile and pharmaceutical products.
Stress on India over US tariffs
A Kotak Research report on Wednesday said that the US' reciprocal tariff of 25 per cent on Indian exports, even without the additional penal 25 per cent tariff effective August 21, could exert pressure on goods exports.
'Depending on the extent of tariff pass-through and the price elasticity of US imports, annual export losses could be in the range of US$0-35 bn, with risks skewed toward the higher end. In a scenario where tariffs rise to 50 per cent, the entire non-exempted export basket (around US$55 bn) could be at risk annually,' the report said.
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