India Resumes Trade Talks With Russia-Led EAEU Amid US Tariff Pressure

India has restarted trade deal negotiations with the Russia-led Eurasian Economic Union (EAEU), marking a strategic shift in its trade policy after US President Donald Trump hiked tariffs on Indian goods to 50% and labelled India a “dead economy.”

The EAEU, comprising Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan, has a combined GDP of $6.5 trillion. Trade talks between India and the bloc were stalled in early 2022 following the Ukraine war.

Fresh Push for an FTA

On Wednesday in Moscow, India’s Additional Commerce Secretary Ajay Bhadoo and EAEU’s Mikhail Cherekaev signed the Terms of Reference (ToR) to begin negotiations on a Free Trade Agreement (FTA). The commerce ministry said the pact could unlock new markets, boost investments, and strengthen long-term economic cooperation.

India–EAEU trade reached $69 billion in 2024, up 7% from the previous year. Officials believe the proposed FTA will expand market access for Indian exporters, especially in textiles and pharmaceuticals, while offering a level playing field against non-market economies.

Pivot Away From US

Following Washington’s tariff hike, New Delhi has deepened outreach with Russia, China, and Brazil. Prime Minister Narendra Modi has already spoken to Russian President Vladimir Putin and Brazilian President Lula da Silva, and is expected to meet Chinese President Xi Jinping later this month.

Oil Trade & Rupee-Ruble Push

India’s trade imbalance with Russia has widened sharply as crude oil imports surged post-Ukraine war, pushing the deficit to over $60 billion. While Indian exports to Russia grew modestly to $4.88 billion in FY25, oil purchases dominate bilateral trade.

Officials confirmed fresh talks are underway to revive rupee-ruble settlements, a mechanism that collapsed last year. Meanwhile, Russia and China have already established a local currency trade system, reducing reliance on the US dollar.

Tariff Shock From US

Analysts warn that steep US tariffs could cost India up to $35 billion annually, with the risk rising to $55 billion if the full 50% levy is imposed. Exporters, particularly in MSMEs, are now banking on alternative markets like Russia and the EAEU to cushion the blow.