Russia-led EAEU team to visit India in September for free trade talks

A high-level EAEU delegation will visit New Delhi next month to begin negotiations on a proposed trade pact, expected to expand India's export markets

A high-level delegation from the Russia-led Eurasian Economic Union (EAEU) will visit New Delhi next month for discussions on the proposed free trade agreement (FTA) just weeks after the final framework for launch of negotiations was announced.

 

Both sides aim to conclude the FTA talks in the next 18 months, with the possibility of an earlier conclusion but that depends on the pace of negotiations, a person aware of the matter told Business Standard.

 

EAEU, comprises Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan.

 

Russia is the largest country and the largest trade partner in the bloc – accounting for over 92 per cent of the bloc’s total trade with India.

 

The proposed trade deal with the Russia-led bloc has significant economic and strategic significance. This comes at a time when Indian exports are facing a steep 50 per cent tariff in the United States (US).

 

The rush behind the tight timeline for signing the FTA is seen as a move to diversify and access other key export markets.

 

This is especially at a time when India has not been able to seal an interim trade deal with the US — its largest trade partner and export destination.

 

Adding to this is the ongoing geopolitical tensions. Washington believes that India's continued purchase of Russian oil is in a way helping fund the Ukraine conflict.

 

It has been exerting pressure on New Delhi by imposing additional tariffs on steel, aimed at curbing India’s trade — particularly oil imports — with Russia.

 

FTA gains

 

A trade deal with the EAEU has been in discussion for over two years but it was only last week that India and the EAEU signed the terms of reference (ToR) to launch negotiations. This was during the visit of a high-level Indian delegation to Russia.

 

Government officials said that the trade deal will help address India’s high trade deficit with Russia. India is looking to fix the non-tariff barriers that Indian exporters face in the Russian market in sectors such as agriculture and marine products.

 

“The FTA will address the trade deficit with Russia, in terms of getting greater market access. A lot of these commodities are not being exported to Russia because of market access issues. So, the FTA will address these issues,” two government officials said.

 

“We are also looking forward to tariff concessions on traditional sectors of export such as footwear, leather, textiles and engineering goods,” one of the government officials said.

 

Both sides will also sort payment-related challenges with respect to the vostro-account mechanism — to facilitate trade in rupees with sanctions-hit Russia.

 

“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 and enhance competitiveness against non-market economies. It would deliver significant benefits to micro, small and medium enterprises (MSMEs),” the commerce department had said last week in a statement.