Brief Context
In News India and the Eurasian Economic Union (EAEU) signed the Terms of Reference (ToR) to launch negotiations on a Free Trade Agreement (FTA) in Moscow. Eurasian Economic Union (EAEU) The Eurasian Economic Union (EAEU) is an international organization of regional economic integration with international legal personality. Its goal is to enhance cooperation, boost competitiveness, and support the stable development of member economies.
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Syllabus :GS2/IR
In News
- India and the Eurasian Economic Union (EAEU) signed the Terms of Reference (ToR) to launch negotiations on a Free Trade Agreement (FTA) in Moscow.
Eurasian Economic Union (EAEU)
- The Eurasian Economic Union (EAEU) is an international organization of regional economic integration with international legal personality.
- Its goal is to enhance cooperation, boost competitiveness, and support the stable development of member economies.
- It ensures the free movement of goods, services, capital, and labor, and pursues coordinated policies among its members.
- Members: It comprises Armenia, Belarus, Kazakhstan, Kyrgyz Republic and the Russia
- The Union membership is open for any state, which shares the goals and principles of the EAEU, on the terms agreed by Member States.
Benefits
- The proposed FTA is expected to expand market access for Indian exporters, support diversification into new sectors and geographies, enhance competitiveness against non-market economies, and deliver significant benefits to Micro, Small and Medium Enterprises (MSMEs).
Challenges
- India-Russia trade has grown significantly since Russia’s invasion of Ukraine in 2022, especially with Russia now accounting for 35–40% of India’s oil imports, up from under 2%.
- However, India’s exports to Russia have only modestly increased, creating a trade deficit exceeding $60 billion.
- To address this, India is revisiting rupee-ruble trade mechanisms after earlier efforts failed, while Russia-China trade has successfully shifted to domestic currencies.
- Meanwhile, India faces steep tariffs from the US, prompting exporters to seek alternative markets like Russia for textiles and pharmaceuticals. Currently, India mainly exports engineering goods, electronics, and pharmaceuticals to Russia.
- Reports warn that rising US tariffs—potentially reaching 50%—could severely impact Indian exports.
Source :PIB