Eye on free-trade agreement, India seeks Eurasian bloc trade data

India has sought the latest trade data from the five Eurasian Economic Union (EAEU) nations as both sides intend to initiate discussions on a free-trade agreement (FTA), people aware of the matter said. 

Eurasian Economic Union comprises five countries — the Russian Federation, Kazakhstan, Belarus, Armenia, and Kyrgyzstan. Russia is not only the largest country in the bloc but also the biggest trade partner, with a share of 98 per cent in 2022-23.

The pact, if materialised, will strengthen the bilateral commercial relationship between India and Russia.

“The initial stage of discussions is underway. India has sought the latest trade data from all the five countries for its own assessment. Discussions have been going on for some time, but it is taking time,” a person aware of the matter told Business Standard.

Besides, India and Russia are discussing some of the non-trade barriers that Indian exporters are facing with respect to certain clearances in sectors such as pharmaceuticals. “Talks can pick up pace, if faster progress is shown with respect to these issues,” another person said.

India and the EAEU had decided to have initial discussions to set the agenda for the trade negotiations and finalise the structure of the joint text for the trade agreement in March 2020 in Moscow. It eventually got postponed due to the Covid-19 pandemic. 

In January last year, both sides had finalised the terms of reference pertaining to the proposed trade agreement. However, the conflict between Russia and Ukraine delayed the progress. That apart, inking a trade agreement with the EAEU won’t be easy and will be more of a strategic call due to the Russia-Ukraine conflict, experts pointed out.

During 2022-23, India’s total trade with the EAEU was $50.3 billion, of which trade with Russia was $49.3 billion, followed by Kazakhstan (641.6 million) Armenia ($135.3 million), Belarus ($111.8 million), and Kyrgyzstan ($56.6 million), commerce department data showed.

Trade with Russia was mainly dominated by rising dependence on discounted crude oil that has widened the trade balance between both nations. While India’s exports to Russia was only $3.1 billion in FY23, New Delhi stared at a trade deficit of $43 billion during the same period.

Earlier this year, External Affairs Minister S Jaishankar had flagged concerns regarding the widening trade deficit with Russia, and will work with the sanction-hit nation to address market access, non-tariff barriers, payments as well as logistics-related issues.

“We have crossed the bilateral trade target of $30 billion before 2025, which was the target year given to us by our leadership. In fact, for the April 2022-February 2023 period, I understand that the trade is actually about $45 billion and the expectation is this will continue to grow. There is also understandable concern about the trade imbalance, which these new volumes have created. We need to work together with our Russian friends on a very urgent basis on how to address that imbalance,” the minister had said.