Money Control - 21 August 2025
India turns to Russia-led Eurasian bloc for FTA: How New Delhi is expanding trade beyond US and UK | Explained
After clinching a free trade agreement (FTA) with the United Kingdom, India is now moving forward with other trade partnerships. One of the most significant developments came this week in Moscow, where New Delhi and the Eurasian Economic Union (EAEU) signed the Terms of Reference (ToR) to formally launch negotiations for an FTA.
The EAEU, comprising Armenia, Belarus, Kazakhstan, Kyrgyz Republic, and Russia, represents a combined GDP of $6.5 trillion and nearly 180 million people. The bloc was created in 2015 as Moscow’s counterweight to the European Union, with the stated goal of promoting “the free movement of goods, services, capital, and labour” across its members.
Why the EAEU matters for India
Trade between India and the EAEU reached $69 billion in 2024, marking a 7 per cent rise over the previous year, according to India’s commerce ministry. The push for an FTA is seen as a way to open up new markets for Indian exporters, diversify trade partners, and strengthen New Delhi’s presence in Eurasia at a time when ties with Washington have hit turbulence.
The commerce ministry underlined the benefits of the deal, stating: “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).”
It added that “both sides reaffirmed their commitment to the early conclusion of the agreement and to building a long-term institutional framework for trade cooperation.”
The Russia factor
India’s pivot toward the EAEU also reflects its growing dependence on Russia for crude oil. Before the Ukraine war, Moscow was a negligible supplier to India. Today, Russian oil accounts for more than a third of India’s crude imports.
The ToR was signed by Ajay Bhadoo, Additional Secretary, Department of Commerce, and Mikhail Cherekaev, Deputy Director, Trade Policy Department, EEC.
Strains with the US
By contrast, India’s long-discussed FTA with the United States has stalled. Washington has slapped tariffs on Indian goods, citing New Delhi’s purchases of discounted Russian oil. US President Donald Trump has been particularly critical, even labelling both India and Russia as “dead economies.”
India has pushed back, calling the tariffs “unfair, unjust and unreasonable,” while pointing to Western “hypocrisy” in continuing trade with Moscow despite sanctions.
Prime Minister Narendra Modi recently addressed the issue, making it clear that India will not compromise its core interests: “I am willing to pay a political price in order to protect the farmers.”
The US wants India to open its agriculture and dairy sectors -- a move New Delhi says could devastate millions of small farmers.
Beyond the EAEU
India isn’t stopping here. Talks are also underway with the European Union, Oman, Chile, and Peru. Negotiations with Oman have concluded and a deal is expected soon, while talks with the EU are scheduled for September.
