India Starts Free Trade Negotiations with the Eurasian Economic Union
The Eurasian Economic Union and India will sign a deal this Saturday, paving the way for negotiations on a future free trade zone agreement, the Chairman of the Eurasian Economic Commission’s Board Tigran Sarkisyan has said.
Speaking on the sidelines of the St. Petersburg International Economic Forum, Sarkisyan stated, “We announce the start of a negotiation process with an eye on signing a free trade zone pact. Two ministers – the trade ministers of Russia and India – will sign a document on the issue.”
Sarkisyan said he met with Indian Prime Minister Narendra Modi in St. Petersburg. “We discussed trade and economic relations between the Eurasian Economic Union and India. We noted with satisfaction that both sides are interested in signing a treaty of this kind, and the results of a research into the issue demonstrate that it will be a win-win situation for India and the EAEU. We agreed that work should continue to make us prepared for signing this treaty.”
The EAEU is a Free Trade Bloc that includes Armenia, Belarus, Kazakhstan, Krygyzstan, and Russia. It essentially extends from the borders of China to the borders of the European Union.
Connections between India and Russia are improving, although bilateral trade remains low. However, the International North-South Transportation Corridor connects India to Russia via Iran, which is in the process of concluding its own Free Trade Agreement with the EAEU.
Nevertheless, Russian-Indian bilateral trade is moving upwards. Notably, Indian companies in the jewelry sector have expressed interest in the Eurasian Diamond Exchange, which has just opened in Vladivostok. The KGK Group, India’s largest diamond merchants, are spending US$25 million on establishing a facility there. Further, Indian pharmaceutical companies should note that the EAEU has just regulated its common pharmaceutical market, which could have immense significance for Indian access to the EAEU – should the Free Trade Agreement (FTA) reach a conclusion.
Thus far, numerous countries, including China, have expressed interest in an EAEU FTA, while Vietnam has ratified such a deal. That has been a boom for both sides; Russia has invested some US$10 billion into Vietnamese projects and Russian exports to Vietnam have risen sharply since the FTA came into effect in early 2016.
“New Asian trade routes are being established throughout Eurasia”, says Chris Devonshire-Ellis of Dezan Shira & Associates “and India and Russia are no exception to this. The two countries are old friends and although bilateral trade is relatively low, this also means the growth potential is huge, and it is not a crowded market. Russian entrepreneurs should be looking at India and its huge consumer market and competitive manufacturing environment, while India’s entrepreneurs should be examining Russia, and especially trade, e-commerce, and logistics in using Russia as a stepping stone to the EU and China. There are plenty of opportunities in this newly opening trade corridor.”
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