India and the Eurasian Economic Union (EAEU), which includes Russia, Armenia, Belarus, Kazakhstan, and the Kyrgyz Republic, have taken a significant step towards strengthening their economic partnership by signing the Terms of Reference (ToR) to launch negotiations for a Free Trade Agreement (FTA). The signing took place in Moscow, with Ajay Bhadoo, Additional Secretary, Department of Commerce, Government of India, and Mikhail Cherekaev, Deputy Director, Trade Policy Department, Eurasian Economic Commission (EEC), representing their respective sides.

The EAEU, established in 2015, represents a single market with a population of 183 million and a combined GDP exceeding $2.5 trillion. The proposed FTA aims to create a trade bloc with a combined GDP of $6.5 trillion, offering significant opportunities for economic growth and diversification.

Trade between India and the EAEU reached $69 billion in 2024, a 7% increase over 2023. While trade is growing, a significant portion is between India and Russia. In 2024-25, India's exports to Russia were $4.8 billion, while imports amounted to $63.8 billion. This FTA is expected to unlock untapped trade potential, increase investments, and establish a stronger, more durable economic partnership between India and the EAEU.

The FTA is projected 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). India is particularly interested in opportunities for its agriculture and engineering sectors in Russia, as well as investments in the energy sector.

Both sides have expressed a strong commitment to the early conclusion of the FTA, aiming to build a long-term institutional framework for trade cooperation. Formal negotiations on the FTA may be announced or launched during President Putin's visit later this year. This agreement is viewed as a potential model for regional cooperation, strengthening India's strategic trade position and fostering long-term bilateral cooperation.

This move comes amid pressure from the U.S. in the form of additional tariffs on imports from India, seemingly to reduce its economic ties with Russia. India has been actively strengthening its trade diplomacy, having recently finalized FTAs with Mauritius, UAE, Australia, EFTA nations, and the UK. Negotiations are also ongoing for further trade deals with Oman, EU, Sri Lanka, Peru, Chile, New Zealand, and the United States, alongside upgrades to older agreements with ASEAN and South Korea.