India–EAEU ToR: Paving the Way for a Game-Changing FTA
- Dr.SanjayKumar Pawar
Table of Contents
- Introduction: Why This ToR Matters
- Understanding the Players: What Is the EAEU?
- Context & Strategic Timing
- Breaking Down the ToR
- Trade Snapshot & Economic Stakes
- Implications for Indian Exporters and MSMEs
- Geopolitical Dynamics & Strategic Autonomy
- Next Steps: What Lies Ahead in Negotiations
- Visual Aid: Trade Growth and Economic Potential
- Conclusion: A Balanced Path Forward
- FAQ
1. Introduction: Why This ToR Matters
The signing of the Terms of Reference (ToR) between India and the Eurasian Economic Union (EAEU) is more than a technical milestone—it represents a pivotal shift in how India positions itself in the global economy. The ToR officially launches negotiations for a Free Trade Agreement (FTA), creating new opportunities at a time when India is actively diversifying its trade partnerships.
The EAEU, comprising Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan, brings to the table a combined GDP of over $6.5 trillion. With trade between India and the bloc already touching $69 billion in 2024—a 7% growth from the previous year—this agreement could unlock substantial gains for Indian exporters, small businesses, and investors.
What makes this moment significant is its timing. As global supply chains undergo transformation and India faces pressure from Western partners, especially the U.S., to scale back ties with Russia, New Delhi is signaling strategic autonomy. The ToR reflects India’s determination to pursue balanced trade relations, expand market access, and enhance economic resilience.
This agreement is not just about trade—it’s about India securing its place as a dynamic, forward-looking economy in a rapidly changing world order.
2. Understanding the Players: What Is the EAEU?
The Eurasian Economic Union (EAEU) is a powerful regional trade and economic bloc made up of Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan. Established in 2014 under the Treaty on the EAEU, the union was designed to strengthen economic integration across Eurasia. Much like the European Union, the EAEU seeks to create a seamless economic space by ensuring the free movement of goods, services, capital, and labor among its members.
With a combined GDP of over $6.5 trillion and access to vast natural resources, energy reserves, and strategic transport corridors, the EAEU plays an increasingly important role in global trade. Russia, as its largest economy, anchors the bloc, while countries like Kazakhstan provide critical energy and agricultural exports. For smaller members such as Armenia and Kyrgyzstan, the EAEU offers access to larger markets and investment flows.
As global trade patterns shift, the EAEU has been actively engaging with third-party countries. By 2024, India emerged as a key partner, with talks of a Free Trade Agreement (FTA) gaining momentum. This growing outreach reflects the bloc’s ambition to expand its global footprint and provide its members with broader economic opportunities in an era of shifting alliances.
3. Context & Strategic Timing
India’s decision to sign the Terms of Reference (ToR) with the Eurasian Economic Union (EAEU) comes at a particularly critical moment in global trade diplomacy. With negotiations for a Free Trade Agreement (FTA) with the United States stalled, New Delhi finds itself navigating a shifting economic landscape. The recent imposition of sweeping U.S. tariffs—some as high as 50% on Indian imports, particularly targeting flows linked to Russian crude oil—has underscored the risks of overdependence on a handful of partners.
By moving ahead with the EAEU, which includes Russia, Belarus, Armenia, Kazakhstan, and Kyrgyzstan, India signals its commitment to strategic diversification. This is not just about trade numbers, although the $69 billion turnover in 2024 speaks for itself. It’s about resilience—ensuring that Indian exporters, from large conglomerates to MSMEs, have alternative markets to cushion against geopolitical shocks.
The timing of the ToR’s signing in Moscow highlights India’s balancing act: deepening ties with Eurasia while maintaining relationships with Western economies. In a world increasingly shaped by sanctions, supply chain disruptions, and protectionism, India’s pivot demonstrates a proactive approach. Rather than waiting for doors to close, it is opening new ones—fortifying its place in the evolving global order.
4. Breaking Down the ToR
The signing of the Terms of Reference (ToR) between India and the Eurasian Economic Union (EAEU) is more than a bureaucratic step—it is the foundation on which the upcoming Free Trade Agreement (FTA) will be negotiated. By agreeing to the ToR, both sides have created a structured roadmap that transforms intent into action.
At its core, the ToR serves as the rulebook for negotiations. It defines who is involved, what will be discussed, and how the process will move forward. For India, this is a critical moment: it signals not only growing engagement with Eurasian economies but also its determination to diversify trade partners in a shifting global order.
Key Highlights of the ToR
-
Formal Signatories:
The ToR was signed by Ajay Bhadoo, Additional Secretary at India’s Department of Commerce, and Mikhail Cherekaev, Deputy Director of the Trade Policy Department at the Eurasian Economic Commission (EEC). Their signatures officially launched the process, representing the commitment of both governments to move negotiations from theory to practice. -
High-Level Dialogue:
The framework was also discussed with Andrei Slepnev, Trade Minister at the EEC. His involvement ensures that the process has ministerial-level oversight, increasing the likelihood of political and economic alignment across the five EAEU member states—Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan. -
Organizational Structure:
The ToR lays out the mechanics of negotiations—from creating joint working groups to setting timelines and identifying priority sectors such as energy, agriculture, pharmaceuticals, IT services, and MSMEs. This structured approach reduces ambiguity and accelerates decision-making. -
Next Steps:
Both sides agreed that negotiations should aim for an early conclusion, while also putting in place a long-term institutional framework. This ensures that the partnership will not remain a one-off deal but evolve into a sustainable economic bridge between India and Eurasia.
Why the ToR Matters
- It transforms political intent into a practical roadmap.
- It brings together stakeholders across government, industry, and trade bodies.
- It ensures that negotiations are systematic, time-bound, and outcome-oriented.
- It signals to global markets that India is actively expanding its trade alliances despite external pressures.
In essence, the ToR is the blueprint of trust and cooperation. It doesn’t finalize the FTA but creates the momentum needed to get there—offering Indian exporters, investors, and policymakers a clearer picture of the road ahead.
5. Trade Snapshot & Economic Stakes
When India and the Eurasian Economic Union (EAEU) signed the Terms of Reference (ToR) to begin negotiations for a Free Trade Agreement, the numbers already told a powerful story.
1. Rising Trade Volume
- In 2024, the trade turnover between India and the EAEU bloc reached $69 billion, marking a 7% increase from 2023.
- This growth came despite the lingering impact of global supply chain disruptions, Western sanctions on Russia, and the broader uncertainties triggered by the Russia–Ukraine conflict.
- The steady upward curve reflects the resilience of India–EAEU trade relations and the strong demand for Indian pharmaceuticals, textiles, IT services, and agricultural products within the Eurasian markets.
2. The EAEU Market Potential
- The combined GDP of the Eurasian Economic Union is estimated at $6.5 trillion, offering Indian businesses access to a substantial and diversified consumer base.
- For context, this figure is comparable to the GDP of major global economic powers and represents a gateway to markets across Central Asia, Eastern Europe, and Russia.
- Sectors like energy, defense equipment, IT solutions, agriculture, and machinery present enormous opportunities for Indian exporters looking to diversify beyond the traditional Western and Middle Eastern markets.
3. Significance Amid Geopolitical Tensions
- What makes this trade trajectory remarkable is that it has occurred against the backdrop of geopolitical headwinds.
- The Russia–Ukraine conflict and sanctions had initially stalled FTA negotiations, but both sides have since recognized the importance of insulating trade from political turbulence.
- India’s ability to sustain and even grow its trade with the EAEU highlights Delhi’s strategy of balancing ties with multiple blocs—maintaining relations with the U.S. and EU, while deepening economic cooperation with Eurasia.
4. Why This Matters for India’s Economy
- For MSMEs and Indian exporters, tapping into a $6.5 trillion market could be transformative.
- The FTA, once concluded, could reduce tariffs, simplify customs procedures, and ensure easier market access.
- Most importantly, it would allow India to diversify its trade dependencies, build resilience, and strengthen its claim as a major global economic player.
📌 The India–EAEU trade story is not just about numbers—it’s about strategic resilience, market diversification, and unlocking new growth engines for the Indian economy.
6.Implications for Indian Exporters and MSMEs
The signing of the Terms of Reference (ToR) between India and the Eurasian Economic Union is more than a diplomatic milestone—it is a signal of opportunity for Indian exporters and Micro, Small, and Medium Enterprises (MSMEs). As negotiations progress toward a Free Trade Agreement (FTA), the impact could reshape India’s trade landscape.
Here’s how this move can directly benefit Indian businesses:
🔹 1. Expanded Market Access
Indian exporters will gain entry to a combined $6.5 trillion EAEU economy, spanning Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan. For MSMEs, which often struggle to break into developed markets, the FTA could lower entry barriers and make Eurasian markets more accessible. This means more demand for Indian pharmaceuticals, textiles, IT services, machinery, and agriculture products.
🔹 2. Diversification of Exports
Currently, Indian trade is heavily concentrated with a handful of partners such as the US, EU, and the Middle East. By engaging with the EAEU, exporters can reduce dependence on limited markets and avoid risks linked to global slowdowns or sanctions. This diversification is crucial for MSMEs, which are highly vulnerable to market fluctuations.
🔹 3. Increased Global Competitiveness
With reduced tariffs and harmonized regulations, Indian products could become more price-competitive compared to goods from non-market economies. MSMEs, often squeezed by high compliance costs, would gain a level playing field. This could translate into better margins, stronger brand recognition, and enhanced credibility in Eurasian markets.
🔹 4. Boost to MSMEs
MSMEs are the backbone of India’s economy, contributing nearly 30% to GDP and 45% to exports (Ministry of MSME, Govt. of India). An FTA with the EAEU could bring simplified customs procedures, transparent standards, and digital trade facilitation—all of which reduce red tape. This gives smaller firms the agility to expand abroad without being crushed by bureaucracy.
🔹 5. Deeper Investment Flows
Beyond goods, the FTA could encourage mutual investments in sectors like energy, infrastructure, IT, and logistics. For Indian MSMEs, this means not only exporting products but also forming joint ventures, technology partnerships, and supply-chain collaborations with Eurasian counterparts—ensuring sustained, long-term growth.
The India–EAEU ToR is a springboard for Indian exporters and MSMEs. By unlocking new markets, diversifying risks, and lowering barriers, it has the potential to turn small businesses into global players while strengthening India’s position in the evolving trade order.
7. Geopolitical Dynamics & Strategic Autonomy
The signing of the Terms of Reference (ToR) between India and the Eurasian Economic Union (EAEU) goes far beyond economics—it reflects a strategic choice in global politics. As the world’s trade landscape becomes increasingly fragmented, India is asserting its strategic autonomy, carefully balancing relations with both the West and emerging partners in Eurasia.
1. Moving Beyond Western-Centric Trade Networks
For decades, India’s major trade partners have been the U.S. and the European Union. While these relationships remain critical, overdependence on a limited set of markets poses risks. The India–EAEU FTA negotiations highlight New Delhi’s push to diversify trade networks, ensuring Indian exporters have access to new markets in Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan. This diversification not only spreads economic opportunities but also reduces vulnerability to geopolitical disruptions.
2. Responding to U.S. Tariffs and Economic Pressure
In 2025, the U.S. imposed steep tariffs on certain Indian imports—some reaching 50%—to pressure New Delhi into scaling back its energy and trade ties with Russia. Instead of bowing to this economic coercion, India has chosen to strengthen Eurasian ties, signaling that its trade policy will not be dictated solely by Western preferences. By deepening partnerships with the EAEU, India creates a buffer against such unilateral trade actions.
3. Parallel Engagements: UK, EFTA, and Beyond
It is important to note that India’s Eurasian outreach does not mean abandoning Western partnerships. Negotiations with the UK and the recently concluded deal with the European Free Trade Association (EFTA) show that India is pursuing a multi-vector trade strategy. This approach ensures India is not locked into any single bloc but can tap into opportunities across continents.
4. Leveraging Autonomy in a Polarized World
As tensions between the West and Russia continue, India’s stance demonstrates its independent foreign policy—engaging with all major powers while keeping national interests at the core. The India–EAEU FTA negotiations enhance India’s bargaining power, giving it leverage in talks with other global players. It signals that India is ready to chart its own path, pursuing economic growth without being drawn into exclusive geopolitical camps.
In essence, the India–EAEU ToR is more than a trade milestone—it is a geopolitical statement. By practicing strategic autonomy, India strengthens resilience, diversifies trade, and builds leverage in a world where economic relations are increasingly tools of political influence.
8. Next Steps: What Lies Ahead in Negotiations
- Tariff modalities: Deciding which products will get duty-free access and which sectors may remain protected.
- Services and investment chapters: Facilitating Indian IT, pharma, and service exports while attracting EAEU investments in infrastructure and energy.
- Regulatory cooperation: Harmonizing technical standards, certifications, and customs procedures to reduce bottlenecks.
- MSME access: Ensuring small and medium enterprises benefit from lower entry barriers and market outreach.
- Rules of origin: Preventing third-party goods from unfairly benefiting from tariff reductions.
- Dispute settlement: Designing mechanisms to resolve trade conflicts quickly and fairly.
- Negotiation rounds at regular intervals.
- Technical committees for specialized areas like agriculture, digital trade, and investment.
- Timeline planning to keep talks on track.
- Stakeholder consultations to incorporate industry and policy feedback.
The signing of the Terms of Reference (ToR) between India and the Eurasian Economic Union (EAEU) is not the end—it’s the starting line of an important negotiation journey. As both sides prepare to sit across the table, the road ahead will involve careful discussions, sectoral focus, and the creation of a robust institutional framework. Let’s break down what comes next.
1. Formal Negotiation Journey Begins
With the ToR in place, the formal FTA negotiations will commence. This is where the broad vision will be translated into structured dialogue and draft texts. Each round of talks will add clarity on how India and the EAEU plan to ease trade barriers, align standards, and foster investment flows.
2. Key Areas of Dialogue
Several critical issues will dominate the agenda:
3. Institutional Architecture
To manage these complex negotiations, both parties will set up a structured architecture:
This framework ensures transparency, accountability, and measurable progress.
4. Role of Stakeholders
A successful FTA cannot be shaped in isolation. Engagement from trade associations, exporters’ bodies, MSMEs, and policy experts will be critical. Their insights will highlight sector-specific concerns, from tariff cuts on textiles to certification hurdles in pharma. By aligning policy with ground realities, India can negotiate an agreement that benefits businesses of all sizes.
The path ahead for the India–EAEU FTA is complex but promising. With structured talks, inclusive stakeholder participation, and a focus on both trade and strategic resilience, this negotiation could unlock new opportunities for India’s economy while deepening Eurasian partnerships.
9. Visual Aid: Trade Growth and Economic Potential
10. Conclusion: A Balanced Path Forward
The signing of the ToR between India and EAEU offers a compelling chapter in India’s trade narrative. With $69 billion in trade and a $6.5 trillion EAEU economy in view, the FTA has the potential to yield transformative economic returns—if navigated judiciously. From unlocking new markets to strengthening MSMEs and underpinning strategic resilience, this move reflects India’s evolving posture in global trade: pragmatic, diversified, and assertively autonomous.
11. FAQ
Q1: What exactly are Terms of Reference (ToR)?
A: The ToR sets the architecture for formal negotiations—defining the scope, objectives, organizational structure, and timelines for the FTA talks.
Q2: Who signed the ToR on behalf of India and the EAEU?
A: India: Ajay Bhadoo, Additional Secretary, Dept. of Commerce. EAEU: Mikhail Cherekaev, Deputy Director, Trade Policy Dept., EEC .
Q3: What is the trade volume between India and EAEU?
A: Approximately US $69 billion in 2024, marking a 7% increase over the previous year .
Q4: What benefits does India expect from this FTA?
A: Expanded market access, export diversification, MSME uplift, competitiveness against non-market economies, enhanced trade and investment flows .
Q5: Why now—what’s driving the timing?
A: Amid stalled U.S. FTA talks and punitive duties (up to 50%), India seeks alternative partnerships, signaling a shift toward trade diversification and resilience .
Q6: What are the next phases in the FTA process?
A: Negotiation rounds based on ToR, sectoral deep-dives (goods, services, investments), institutional setup, stakeholder consultations, and drafting of agreement chapters.
Q7: How does this align with India’s broader trade ambitions?
A: It complements existing FTAs (e.g., with UK, EFTA) and reinforces India’s strategic autonomy and network diversification .
📚 References
-
Ministry of Commerce & Industry, Government of India – Official press release on signing of ToR with EAEU (2025).
🔗 commerce.gov.in -
Eurasian Economic Commission (EEC) – Overview of EAEU integration and trade agreements.
🔗 eec.eaeunion.org -
The Tribune India – “India and Eurasian Economic Union sign Terms of Reference to launch FTA negotiations” (Aug 2025).
🔗 tribuneindia.com -
Economic Times – “India, EAEU ink pact to launch FTA talks” (Aug 2025).
🔗 economictimes.indiatimes.com -
Hindustan Times – “India, five-nation Eurasian Economic Union decide to negotiate FTA” (Aug 2025).
🔗 hindustantimes.com -
Indian Express – “India restarts trade deal talks with Russia-led EAEU bloc amid US tariffs” (Aug 2025).
🔗 indianexpress.com -
Business Standard – “India and Eurasian Economic Union to launch negotiations on FTA” (Aug 2025).
🔗 business-standard.com
No comments:
Post a Comment