India–EAEU Relations: Opportunities and Challenges of the Eurasian Gamble

Context: India and the Eurasian Economic Union (EAEU) — led by Russia — have finalised a framework to launch negotiations for a Free Trade Agreement (FTA).

Current Status of India–EAEU Trade

Bilateral Trade (India–Russia)

• 2024–25: $68.7 billion (5.5 times higher than pre-pandemic).
• Exports: $4.88 billion.
• Imports: $63.84 billion (mainly discounted crude oil).
• India’s oil imports from Russia: ~20% of total crude imports.

India–EAEU Overall (FY25)

• Exports: $5.5 billion (mainly Russia-focused).
• Imports: $64 billion (dominated by oil).
• Major trade partners within the bloc: Armenia ($264m exports), Kazakhstan ($263m), Kyrgyzstan ($46m), Belarus ($53m).

Trade Structure

• Heavy on oil imports, light on diversified exports.

About the Eurasian Economic Union (EAEU)

• Established: 2015.
• Members: Russia, Belarus, Kazakhstan, Armenia, Kyrgyzstan.
• Largest Economy: Russia — accounts for over 92% of the bloc’s trade.
• Existing FTAs: China, Iran, Vietnam, Serbia.
• Objectives: Free movement of goods, services, capital, and labour; coordinated economic policies.

Opportunities for India in the EAEU

• Diversification of Export Markets: With the US and EU markets tightening (higher tariffs, sanctions pressure), the EAEU offers new destinations.
  • Sectors with export potential:
    • Pharmaceuticals & medical equipment (India has a strong cost advantage).
    • Agriculture & marine products (fish, spices, rice).
    • Engineering goods, plastics, rubber, and auto components.
    • Textiles & garments.

• Energy Security and Price Stability: Russia already supplies ~20% of India’s crude oil imports at discounted prices.
  • An FTA could institutionalise long-term energy cooperation, reducing vulnerability to Middle East instability.
  • Potential to expand into gas, coal, and nuclear energy cooperation.
• Access to Central Asia: EAEU members (Kazakhstan, Kyrgyzstan, Armenia) provide India with a gateway to Central Asia.
• Connectivity and Trade Corridors: The International North-South Transport Corridor (INSTC), once operational, will cut costs by 30-40% and time by 20 days between India and Russia.
  • Also, the Vladivostok–Chennai maritime route opens up Indo-Pacific–Arctic linkages.
• Strengthening Strategic Autonomy: Deepening trade with EAEU diversifies India’s partnerships beyond the West.
  • It reinforces India’s multipolar foreign policy, allowing it to balance ties with the US, EU, and Russia simultaneously.
  • It will also enhance India’s leadership role in the Global South by showing the capacity to operate across competing blocs.
• Industrial and Technology Cooperation: Potential joint ventures in:
  • Defence manufacturing (e.g., submarines, helicopters, spare parts).
  • Space cooperation (India’s ISRO + Russia’s Roscosmos).
  • AI, digital trade, and fintech collaboration (building on SCO’s AI roadmap).
• Boost to Indian SMEs and Farmers: SMEs in apparel, leather, handicrafts, agriculture, and processed food can find new markets due to reduced tariffs.

Challenges

• Geopolitical Risks: Western sanctions on Russia complicate banking, logistics, and payments. Deepening trade with Russia risks straining India’s strategic partnership with the US and EU.
• Trade Imbalance: India’s exports remain small compared to huge oil imports.
  • 2024–25 trade balance with Russia: –$58.9 billion. Without diversification, FTA may deepen asymmetry.
• Logistical & Payment Barriers: INSTC implementation is slow, plagued by geopolitical bottlenecks. Payment mechanisms (rupee–rouble via Vostro accounts) face hurdles due to sanctions.
• Fragile Political Context: EAEU economies (Belarus, Kyrgyzstan, Armenia) are politically volatile and prone to external influence.
• Overlap with China’s Influence: Russia and Central Asia are deeply tied to China’s Belt and Road Initiative (BRI). India risks being a junior partner if China dominates trade corridors.

Way Forward

• Balanced Diplomacy: Maintain equidistance between Russia and the West. Use FTA as an economic lever without undermining India–US–EU ties.
• Diversify Trade Basket: Push Indian exports in pharma, IT, textiles, agriculture, and auto components to reduce oil dependency.
• Connectivity Investments: Accelerate work on INSTC, Chabahar Port, and Vladivostok–Chennai route for reliable logistics.
• Strengthen Payment Systems: Expand rupee-based settlements and digital trade platforms to bypass sanctions-linked hurdles.
• Regional Outreach: Engage with Kazakhstan, Armenia, Kyrgyzstan, and Belarus more actively to reduce Russia-centric dependency.

The proposed India–EAEU FTA is a bold gamble. It offers India a chance to diversify exports, secure energy supplies, and expand its Eurasian presence, but risks trade imbalances and Western pushback. Its success depends on balancing geopolitics with economic pragmatism, boosting exports, and strengthening connectivity, making it a potential pillar of India’s multipolar trade and energy strategy.

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