New Delhi: On August 20, 2025, India and the Eurasian Economic Union (EAEU), a powerful economic bloc comprising Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, and Russia, took a significant step toward deepening their economic ties by signing the Terms of Reference (ToR) to launch negotiations for a Free Trade Agreement (FTA). This landmark agreement, formalized in Moscow, sets the stage for enhanced trade cooperation, aiming to boost exports, empower Micro, Small, and Medium Enterprises (MSMEs), and diversify market access. Amid rising geopolitical tensions, particularly U.S. pressure on India to scale back ties with Russia, this move highlights India’s strategic focus on expanding its global trade footprint.
The Signing Ceremony: A Milestone in Trade Relations
The ToR was signed by Ajay Bhadoo, Additional Secretary of India’s Department of Commerce, and Mikhail Cherekaev, Deputy Director of the Trade Policy Department at the Eurasian Economic Commission (EEC). Held in Moscow, the ceremony underscored the growing economic partnership between India and the EAEU. The Indian Ministry of Commerce and Industry stated that the FTA aims to elevate trade volumes, support MSMEs, and open new markets for Indian goods. Both sides expressed optimism about concluding the agreement swiftly and establishing a robust framework for long-term trade collaboration.
In 2024, bilateral trade between India and the EAEU reached $69 billion, marking a 7 percent increase from 2023. This growth reflects the potential for deeper economic integration. The ToR outlines the negotiation process, aiming to unlock new trade opportunities, attract investments, and strengthen the economic bond between India and the EAEU’s $6.5 trillion market.
Economic Opportunities: Empowering Exports and MSMEs
The proposed FTA is expected to yield significant benefits for India, particularly in expanding market access for its exporters. With the EAEU’s combined GDP of $6.5 trillion and a population of nearly 180 million, the agreement will enable Indian businesses to tap into new sectors and regions. The Ministry of Commerce and Industry highlighted that the FTA will enhance competitiveness, particularly against non-market economies, and deliver substantial advantages to MSMEs, which are critical to India’s economy.
By reducing trade barriers, the FTA will facilitate the movement of goods, services, capital, and labor, aligning with the EAEU’s objectives. This agreement supports India’s strategy to diversify its trade partners, reducing reliance on traditional markets amid evolving global supply chains. For Indian exporters, the deal promises access to Eurasian markets, fostering growth and innovation.
The Eurasian Economic Union: Structure and Origins
The EAEU, established through a treaty signed in Kazakhstan in May 2014 and effective from January 2015, is a regional economic bloc designed to promote free movement of goods, services, capital, and labor among its members: Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, and Russia. It succeeded the Eurasian Customs Union, formed in 2010 with Russia, Belarus, and Kazakhstan, and the Single Economic Space, established in 2012. These initiatives were partly a response to the 2008 global financial crisis and the European Union’s Eastern Partnership Policy, which Moscow perceived as a challenge to its regional influence.
The EAEU’s creation was solidified when Armenia joined, transforming the Customs Union into a broader economic union. Currently, Cuba, Moldova, and Uzbekistan hold observer status, with discussions ongoing about admitting Azerbaijan. The bloc’s $69 billion trade with India in 2024, up 7 percent from 2023, underscores its growing importance as a trade partner.
Geopolitical Dynamics: U.S. Tariffs and India’s Response
The ToR signing occurs amid significant pressure from the United States, which has imposed additional tariffs on Indian imports to discourage India’s economic ties with Russia, particularly its crude oil purchases. Since the Russia-Ukraine conflict, Russian oil has grown to account for over a third of India’s crude imports, a sharp increase from its negligible role previously. U.S. President Donald Trump has criticized India and Russia, calling them “dead economies” and linking tariffs to efforts to resolve the Russia-Ukraine conflict.
India has firmly rejected these tariffs as “unfair, unjust, and unreasonable.” Prime Minister Narendra Modi has emphasized protecting India’s farmers, stating, “I am willing to pay a political price in order to protect the farmers.” The U.S. has pushed for access to India’s agriculture and dairy sectors, but India argues that such concessions could harm millions of small farmers. This disagreement has stalled India-U.S. FTA talks, frustrating the U.S. administration.
Experts note that Russia is not comparable to Iran, and halting oil imports based on U.S. demands would have severe economic consequences for India. New Delhi has also criticized Western nations for continuing trade with Russia despite sanctions, highlighting perceived inconsistencies. The EAEU agreement thus serves as a strategic move to diversify India’s trade alliances and maintain economic autonomy.
India’s Global Trade Strategy
India’s engagement with the EAEU is part of a broader effort to expand its trade partnerships. Following a successful FTA with the United Kingdom, India is negotiating deals with the European Union, Oman, Chile, and Peru. Talks with Oman have concluded, with an agreement expected soon, while EU discussions are set for September 2025. These efforts reflect India’s commitment to diversifying its trade portfolio and mitigating risks from geopolitical uncertainties.
The EAEU deal is particularly strategic given the stalled U.S. talks. With its $6.5 trillion GDP and 180 million consumers, the EAEU offers a vital market for Indian goods, reinforcing New Delhi’s presence in Eurasia.
The Role of Russia: Oil and Diplomacy
India’s growing reliance on Russian crude oil has heightened the EAEU’s strategic importance. The shift from negligible to significant oil imports since the Ukraine conflict underscores Russia’s role as a key energy partner. A file photo from December 6, 2021, showing Prime Minister Narendra Modi meeting Russian President Vladimir Putin in New Delhi, reflects the deep diplomatic and economic ties between the two nations. The FTA negotiations aim to formalize and expand this partnership, ensuring stability amid global pressures.
Conclusion: A Strategic Trade Partnership
The signing of the Terms of Reference on August 20, 2025, marks a critical step toward a transformative India-EAEU Free Trade Agreement. With $69 billion in bilateral trade in 2024 and a 7 percent growth from 2023, the FTA promises to expand market access, empower MSMEs, and strengthen India’s economic presence in Eurasia. Amid U.S. tariffs and stalled talks over agriculture, India’s pivot to the EAEU reflects its commitment to strategic autonomy and diversified trade partnerships.
As negotiations progress, the agreement could redefine India’s economic engagement with Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, and Russia. For readers seeking “India EAEU FTA updates” or “U.S. tariffs impact on India,” this development signals India’s resilience in navigating global trade challenges. Further updates are expected as talks advance, potentially reshaping Eurasian-Indian economic relations.
FAQs
1. What is the India-EAEU Free Trade Agreement, and when was it initiated?
The India-EAEU Free Trade Agreement (FTA) is a proposed trade deal between India and the Eurasian Economic Union (EAEU), which includes Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, and Russia. The negotiations were formally launched with the signing of the Terms of Reference (ToR) on August 20, 2025, in Moscow, setting the framework for discussions to enhance trade and economic cooperation.
2. Who signed the Terms of Reference for the India-EAEU FTA?
The ToR was signed by Ajay Bhadoo, Additional Secretary of India’s Department of Commerce, and Mikhail Cherekaev, Deputy Director of the Trade Policy Department at the Eurasian Economic Commission (EEC), representing the EAEU. The signing took place in Moscow, marking a key step toward formalizing the FTA.
3. What are the expected benefits of the India-EAEU FTA?
The FTA aims to boost Indian exports, expand market access to the EAEU’s $6.5 trillion economy, and support Micro, Small, and Medium Enterprises (MSMEs). It will enhance competitiveness against non-market economies, promote diversification into new sectors and regions, and facilitate the movement of goods, services, capital, and labor, fostering a stronger economic partnership.
4. How does U.S. pressure impact India’s trade relations with the EAEU?
The U.S. has imposed tariffs on Indian imports to pressure India into reducing economic ties with Russia, particularly due to India’s reliance on Russian crude oil, which now accounts for over a third of its imports. India has resisted these tariffs, calling them “unfair, unjust, and unreasonable,” and the stalled India-U.S. FTA talks have prompted India to strengthen ties with the EAEU to diversify trade partners.
5. What is the Eurasian Economic Union, and why is it important to India?
The EAEU, established in 2015, is a regional economic bloc comprising Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, and Russia, with a combined GDP of $6.5 trillion and 180 million people. It promotes free movement of goods, services, capital, and labor. For India, the EAEU is a vital trade partner, with bilateral trade reaching $69 billion in 2024, up 7% from 2023, offering opportunities to expand exports and reduce reliance on Western markets.
