Moving swiftly on its decision to consider a free trade agreement with the newly formed Russia-led Eurasian Economic Union (EEU), India has initiated the process of setting up a joint study group (JSG) to study its feasibility.
“The Commerce Ministry has sent out notes to all the ministries and departments concerned asking them to send their inputs on the areas the JSG should examine. An FTA with EEU makes both economic and strategic sense for us,” a ministry official told BusinessLine .
New Delhi hopes to make strong gains in areas such as pharmaceuticals, textiles, agriculture and energy as well as attract investments in its infrastructure sector, the official added.
Established on January 1 this year, the EEU — an economic union that includes Belarus, Kyrgyzstan, Kazakhstan, Russian Federation and Armenia — offers a lucrative market with a joint population size of 180 million and a GDP of an estimated $4 trillion.
The JSG, which will have officials from both India and the EEU, will jointly look at the areas that a FTA, officially known as a Comprehensive Economic Partnership Agreement (CEPA), could cover, and whether it would be beneficial for both sides.
An agreement to work on a JSG was reached between India and Russia during Commerce and Industry Minister Nirmala Sitharaman’s visit to the country last month. “India is actively looking at establishing strong economic and trade relationship with countries other than the US and the EU, which are its traditional partners. The EEU provides an excellent opportunity to diversify our market base and reduce our dependence on just a few nations,” the official said.
Given the fact that India had a close relationship with the erstwhile Soviet Union, and now that Russia is trying to build another economic union with former members, New Delhi wants to re-establish earlier ties with the region.
India was already working on a CEPA with Russia and the customs union of Belarus and Kazakhstan. The formation of the EEU has widened the canvas of the proposed pact with the region.
“The Ministry of External Affairs is also keen that we get into a CEPA with the EEU as it would be a good move strategically. It doesn’t want India to hesitate and China to fill up the space,” another official said.
India’s exports to the EEU countries in 2014-15 were about $2.5 billion, with $2.1 billion shipped to Russia. There is a huge potential to increase the exports, as India’s share is just a fraction of the region’s total imports.