Syllabus:
GS2: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests
GS3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Context:
India and the Eurasian Economic Union (EAEU) signed the Terms of Reference (ToR) to launch negotiations on a Free Trade Agreement (FTA).
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- The ToR was signed by the Additional Secretary, Department of Commerce, Government of India, and Deputy Director, Trade Policy Department, Eurasian Economic Commission (EEC).
- Both sides noted the growing trade turnover between India and the EAEU, which stood at USD 69 billion in 2024, registering a 7 percent increase over 2023.
- 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.
Potential Benefits of the FTA with EAEU
- Market Access: The FTA would provide Indian exporters with improved access to the EAEU market.
- Sector Diversification: The agreement could encourage India to diversify its exports into new sectors and geographical markets, reducing reliance on traditional trading partners.
- MSME Growth: With a combined GDP of $6.5 trillion, the proposed FTA is set to boost Indian exports, open new markets, improve competitiveness, and benefit MSMEs.
- Increased Investment: The FTA is expected to boost bilateral investments between India and EAEU member states, paving the way for joint ventures, technology transfer, and deeper economic integration.
- Energy Security: In 2024-25, India’s exports to Russia were $4.8 billion, while imports were $63.8 billion, largely due to oil.
Eurasian Economic Union (EAEU)
- The EAEU is an international organization for regional economic integration and successor to the Eurasian Customs Union.
- The member countries of the bloc Armenia, Belarus, Kazakhstan, Kyrgyz Republic, and Russia established it through the Treaty on the Eurasian Economic Union, signed in Kazakhstan in May 2014 and effective from January 2015.
- Cuba, Moldova and Uzbekistan have been granted observer status in the EAEU,
- The EAEU provides for free movement of goods, services, capital and labour, pursues coordinated, harmonized and single policy in the sectors determined by the Treaty and international agreements within the Union.
- The Union is being created to comprehensively upgrade, raise the competitiveness of, and promote cooperation between the national economies, and to promote stable development to raise the living standards of the nations of the Member-States.
- The grouping has a single market of about 183 million people and a GDP of more than $2.5 trillion.