The India-Eurasian Economic Union (EAEU) Free Trade Agreement stands at a pivotal juncture in 2026. With negotiations gaining tangible momentum after years of dormancy, finalising this pact is no longer a matter of diplomatic convenience but an economic necessity. The EAEU which is led by Russia also includes Belarus, Kazakhstan, Armenia, and Kyrgyzstan. This trading bloc represents a combined market of significant scale, with a GDP of around $ 6.5 trillion. Bilateral trade between India and the bloc reached approximately $ 69 billion in 2024, up 7% from the previous year, and India-Russia trade alone hovered near $ 68–69 billion in recent fiscal years. Yet this relationship remains profoundly skewed. The overwhelming bulk of the volume consists of Indian imports of discounted Russian crude oil, creating a massive trade deficit of nearly $ 59 billion with Russia and leaving Indian exports lagging far behind. Finalising the FTA is crucial precisely because it offers a structured pathway to diversify this trade beyond hydrocarbons, open Russian and Eurasian markets to Indian businesses, and correct a structural imbalance that has long constrained mutual gains.
India’s trade with Russia has undergone a dramatic transformation since 2022. Russian crude, once a marginal supplier, now accounts for roughly half or more of India’s oil imports in recent months, driven by attractive discounts amid western sanctions. While this has delivered short-term energy security and fiscal savings, it has rendered the partnership one-dimensional. Indian exports to Russia remain modest around $ 4.9 billion in recent data concentrated in pharmaceuticals, machinery, and limited other categories. The deficit is not merely a statistical concern; it limits the depth of economic interdependence and exposes both sides to volatility. Energy markets fluctuate, geopolitical pressures evolve, and over-reliance on a single commodity creates vulnerability. Diversification is therefore essential. An FTA would systematically lower or eliminate tariffs on a wide range of goods, reduce non-tariff barriers such as complex sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBT), and create predictable rules of origin and customs procedures. This would enable Indian exporters of pharmaceuticals, chemicals, engineering goods, automobiles and components, textiles, agricultural and marine products, processed foods, and consumer goods to compete more effectively in the Russian market and the broader EAEU.
For Indian businesses, particularly micro, small, and medium enterprises (MSMEs), farmers, and fishermen, the EAEU represents an under-explored frontier. Russia and its partners offer demand for affordable, quality products in sectors where India holds competitive advantages. Harmonisation of standards, simplified certification, and reduced compliance costs are key Indian priorities in ongoing talks and would lower entry barriers that currently hinder smaller exporters. Pharmaceuticals, already a relative success story, could expand further through mutual recognition of standards and faster registration processes. Engineering and machinery exporters could capitalise on Russia’s industrial needs, while agricultural and seafood shippers stand to benefit from clearer SPS rules. Beyond goods, eventual inclusion of services and investment tracks could facilitate technology collaboration, defence-related exports where appropriate, and labour mobility discussions. Logistics improvements, including the International North-South Transport Corridor (INSTC) and potential eastern maritime routes, would further reduce transit times and costs, making trade more commercially viable. The net result would be not only higher export volumes but a more balanced, resilient partnership that moves beyond the oil-centric model toward genuine complementarity.
{{/usCountry}}For Indian businesses, particularly micro, small, and medium enterprises (MSMEs), farmers, and fishermen, the EAEU represents an under-explored frontier. Russia and its partners offer demand for affordable, quality products in sectors where India holds competitive advantages. Harmonisation of standards, simplified certification, and reduced compliance costs are key Indian priorities in ongoing talks and would lower entry barriers that currently hinder smaller exporters. Pharmaceuticals, already a relative success story, could expand further through mutual recognition of standards and faster registration processes. Engineering and machinery exporters could capitalise on Russia’s industrial needs, while agricultural and seafood shippers stand to benefit from clearer SPS rules. Beyond goods, eventual inclusion of services and investment tracks could facilitate technology collaboration, defence-related exports where appropriate, and labour mobility discussions. Logistics improvements, including the International North-South Transport Corridor (INSTC) and potential eastern maritime routes, would further reduce transit times and costs, making trade more commercially viable. The net result would be not only higher export volumes but a more balanced, resilient partnership that moves beyond the oil-centric model toward genuine complementarity.
{{/usCountry}}The agreement also carries broader strategic value. In an era of fragmented global trade and rising protectionism, India is actively expanding its FTA network. The EAEU deal complements this by providing access to a Eurasian space that links Europe and Asia, supports supply-chain diversification, and reduces over-dependence on traditional Western or East Asian markets. For Russia and the EAEU, it offers a pathway to diversify their own export baskets and deepen ties with a large, growing economy that has remained commercially engaged despite geopolitical headwinds. Joint study estimates from earlier years projected trade turnover growth of 30–40% under liberalisation, alongside GDP gains for participants. While those figures predate the post-2022 oil surge, the underlying logic of mutual market access remains sound. An interim arrangement covering selected goods, currently under discussion, could deliver early wins while negotiators finalise the comprehensive pact.
Why has this FTA remained pending for so long? The story begins in 2015 with a Joint Study Group, followed by a 2016 report affirming economic benefits and a 2017 joint declaration to launch negotiations. Yet meaningful talks stalled for nearly eight years. India at the time saw limited commercial upside relative to potential import competition, particularly in sensitive sectors, and prioritised other partners. The process effectively froze after 2022 western sanctions on Russia, as legal, financial, and secondary-sanctions risks complicated formal engagement. Payment mechanisms, banking channels, and compliance uncertainties further deterred progress. Only in August 2025 did the sides sign Terms of Reference, formally restarting negotiations with an 18-month work plan. The first round occurred in November 2025; subsequent rounds in 2026 have focused on tariff liberalisation contours, non-tariff measures, SPS/TBT rules, intellectual property, customs, and competition issues. Progress has been real—agreement on goods liberalisation outlines has been reported—but challenges persist: differing regulatory regimes, residual sanctions-related caution among intermediaries, the need to balance sensitive sectors, and the complexity of negotiating with a multi-member customs union. India’s simultaneous pursuit of major deals with the EU, UK, and others has also stretched negotiating bandwidth.
These delays, while understandable in geopolitical context, have become costly. The oil-dominated trade structure has entrenched an imbalance that neither side fully desires. Indian businesses have missed opportunities to scale in a large market during a period of Russian import substitution and reorientation. Prolonged uncertainty discourages investment and long-term commercial planning. Finalising the FTA would lock in preferential access, institutionalise dispute resolution and cooperation mechanisms, and signal political commitment to a multi-dimensional partnership. It would also support India’s broader goals of export diversification, MSME empowerment, and energy security through stable long-term frameworks rather than ad-hoc oil deals.
Finalisation of the India-EAEU FTA is crucial because it addresses the central weakness of the current relationship. By enabling Indian businesses to explore and expand in Russian and Eurasian markets across pharmaceuticals, engineering, agriculture, textiles, and beyond, it promises a more balanced, resilient, and mutually beneficial economic partnership. The long pendency rooted in earlier commercial caution, sanctions-era complexities, and negotiating priorities need not define the future. With talks now advancing and interim options under consideration, political will and pragmatic compromise can deliver an agreement that elevates India-Russia-EAEU ties to a qualitatively higher level. In a turbulent global trading environment, such diversification is not optional; it is essential for sustained growth and strategic autonomy.
(The views expressed are personal)
This article is authored by Pravesh Kumar Gupta, associate fellow, Vivekananda International Foundation, New Delhi.