The signing of the Terms of Reference for a Free Trade Agreement between India and the Eurasian Economic Union in Moscow in August 2025 may, in retrospect, come to be seen as one of the more consequential trade decisions New Delhi has made in recent years. At a moment when the global trading order is fragmenting, American trade policy is lurching between protectionism and coercion, and multilateral frameworks are under sustained stress, India's move to formalise negotiations with the EAEU is not merely a commercial decision. It is a strategic one.

The Context: A Hostile Trade Environment

The world that India's trade negotiators are navigating in 2025 is markedly different from the one that shaped the country's post-liberalisation economic strategy. The United States, under the returning Trump administration, has resumed an aggressive tariff posture that treats trade surpluses as geopolitical grievances. Blanket tariffs, Section 232 investigations, and the collapse of the IPEF trade pillar have left Asian economies — India included — searching for durable alternatives to US-centred market access. Meanwhile, the WTO dispute settlement mechanism remains effectively paralysed, and the promise of a rules-based multilateral trading order looks increasingly distant.

For India, this creates a dual challenge. On one hand, the country cannot afford to antagonise Washington at a moment when defence technology transfers, semiconductor cooperation, and the broader architecture of the Quad remain central to its strategic calculus. On the other, an exclusive reliance on Western-aligned trade frameworks exposes India to the volatility of American domestic politics in ways that are simply incompatible with long-term economic planning. Diversification, in this context, is not a slogan — it is a structural necessity.

The EAEU Format

The Eurasian Economic Union — comprising Russia, Kazakhstan, Armenia, Belarus, and the Kyrgyz Republic — is not, it must be acknowledged, a grouping that commands the same visibility in Indian policy discussions as ASEAN, the EU, or the Gulf Cooperation Council. Yet its credentials as an international economic cooperation format deserve serious examination.

With a combined GDP of USD 6.5 trillion, the EAEU represents a substantial economic space. The bloc has a functioning common market, a unified customs territory, and a secretariat — the Eurasian Economic Commission — with genuine regulatory competence. It has concluded FTAs with Vietnam, Serbia, Iran, and Singapore, demonstrating institutional capacity to negotiate and implement trade agreements. For India, which has struggled to conclude agreements with large Western economies, the EAEU offers a negotiating counterpart that is motivated, organised, and operating under a clear political mandate to expand its external trade partnerships.

The bilateral trade numbers are not trivial either. India–EAEU trade reached USD 69 billion in 2024, a seven percent increase over the previous year. Much of this reflects the dramatic expansion of India-Russia trade following Western sanctions on Moscow post-2022, particularly in energy. But the aggregate figure reveals an economic relationship that has, quietly and organically, assumed considerable scale. A structured FTA would aim to systematise, deepen, and diversify what has thus far been a relationship driven largely by necessity and informal adaptation.

Diversification as Strategy

India's interest in the EAEU fits within a broader pattern of what might be called strategic hedging through economic pluralism. New Delhi has simultaneously pursued agreements with the UAE, Australia, and the European Free Trade Association, while engaging ASEAN and the African Continental Free Trade Area. The EAEU negotiation extends this logic into Eurasian space — a geography that India has historically underweighted in its trade diplomacy despite civilisational and connectivity linkages dating back centuries.

The ToR signed in Moscow specifically identifies MSMEs as a key beneficiary constituency. This is significant. India's small and medium enterprise sector remains heavily exposed to currency volatility, limited market access, and competition from Chinese manufactures. New export destinations — whether in Kazakhstan, Armenia, or the broader Eurasian hinterland — represent genuine diversification for a sector that has been poorly served by India's existing FTA architecture.

There is also a longer-term connectivity dimension. The International North-South Transport Corridor, which links India to Russia and Central Asia via Iran, has gained renewed salience as an alternative to traditional sea routes. An EAEU FTA would complement this infrastructure logic by providing the legal and regulatory framework to translate physical connectivity into actual trade flows.

The Limits and the Opportunity

Candour requires acknowledging the complications. Russia's isolation from Western financial systems creates settlement and banking challenges for Indian firms. The EAEU's internal market remains uneven, with Belarus and Kyrgyzstan significantly smaller than Russia and Kazakhstan. And any perception in Washington that India is using EAEU engagement to help Russia circumvent sanctions will create diplomatic friction that New Delhi will need to manage carefully.

Yet these complications do not negate the fundamental logic of the initiative. India has long argued for a multipolar world order; an FTA with the EAEU is, among other things, an expression of that commitment in economic form. At a moment when global trade is being reorganised along geopolitical fault lines, the ability to maintain economic relationships across blocs — rather than being captured within any single one — is itself a form of strategic resilience.

The India–EAEU FTA negotiations are at an early stage. The distance from Terms of Reference to concluded agreement is long, and the history of Indian trade negotiations counsels patience over optimism. But the direction of travel is clear, and it is the right one.