India-Eurasian Economic Union (EAEU)

Syllabus: GS2/ International Relation

In News

• India and Russia reiterated their resolve to achieve $100 billion bilateral trade by 2030 in Moscow and reviewed steps for the India-Eurasian Economic Union (EAEU) free trade agreement in goods.

About Eurasian Economic Union (EAEU)

• The EAEU is an international economic union and free trade zone comprising Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia, established by the Treaty on the Eurasian Economic Union in 2014 and effective since January 2015.
• The Union pursues the free movement of goods, services, capital, and labour, coordination of economic policies, elimination of non-tariff trade barriers, and harmonization of regulations among members.
• The EAEU covers a market of nearly 200 million people, with a combined GDP of $6.5 trillion, and is managed by its Supreme Eurasian Economic Council and Eurasian Economic Commission.

Significance of Eurasian Economic Union for India

• Market Access: The EAEU offers access to a vast market, benefiting Indian exporters across textiles, pharmaceuticals, engineering goods, and electronics, as well as MSMEs.​
• Trade Diversification: Engagement with the EAEU enables India to reduce dependency on US/EU markets, addressing vulnerabilities from global tariff disputes.​
• Energy Security: Russia, as the largest EAEU member, is a key supplier of crude oil and natural gas to India; a stronger EAEU partnership supports long-term energy contracts.​
• Connectivity: EAEU cooperation complements initiatives like the International North–South Transport Corridor (INSTC) and the Chennai–Vladivostok maritime route, reducing logistics costs.​
• Geopolitical Importance: Strengthening ties with the Russia-led EAEU supports India’s policy of “multi-alignment” and bolsters its strategic autonomy.

Challenges in India–EAEU Engagement

• High Trade Deficit with Russia: India’s trade deficit with Russia has widened significantly (from USD 6.6 billion in 2021 to USD 58.9 billion in 2024–25), primarily due to hydrocarbon imports, impacting balanced growth.​
• Geopolitical Sensitivities: Closer economic ties with a Russia-led bloc raise concerns among India’s Western partners (NATO, US, EU), requiring careful diplomatic balancing—especially in the context of global sanctions and security.​
• Non-Tariff Barriers: Indian exporters face bureaucratic delays, complex customs procedures, and regulatory inconsistencies within the EAEU, increasing costs and reducing competitiveness.​
• Sanitary and Phytosanitary Standards: Strict SPS standards in EAEU countries limit Indian agricultural exports and require regulatory harmonization.​
• Underutilization of FTAs: India’s FTA utilization rate is low, signaling the need for improved trade facilitation and domestic industry preparedness to leverage future agreements.​

Conclusion

• The EAEU presents a strategic opportunity for India to diversify trade, secure energy supplies, and promote connectivity while navigating economic, regulatory, and geopolitical hurdles. Addressing trade deficit, regulatory barriers, and balancing international relations will be vital for a robust India–EAEU partnership.

Source: PIB