Why in News?
- Russia has recently stated that it is looking forward forward for India to sign Free Trade Agreement (FTA) with Eurasian Economic Union (EAEU).
About Eurasian Economic Union (EAEU)
- The EAEU is an economic union that was established in 2014.
- Member Countries: Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan.
- It provides for free movement of goods, services, capital and labour, pursues coordinated, harmonized and single policy in the sectors determined by the member countries.
- The EAEU is seen as an attempt by Russia to consolidate Russia’s hegemony over the erstwhile Soviet Union countries. It is also seen as a counter measure of Russia against its isolation by USA and EU.
Benefits gained by India and EAEU, if FTA is signed:
- Integration with Global Value Chains: Recently, India decided not to be part of RCEP agreement and hence there is a need for India to explore other FTAs to get integrated into global value chains. The FTA with EAEU would enable India to leverage its strength in services, pharmaceutical drugs, textiles etc and hence would give a much-needed push to boost India’s exports.
- Boost Trade and Investment: India’s total trade with Eurasian region stands at lower value of around $ 9 billion. It is estimated that an FTA would boost bilateral trade between India and EAEU up to $37-62 billion.
- Counter Chinese Influence in Central Asia:India’s trade volume with Central Asia is less than $ 1 billion as compared to China’s $ 50 bn. This is mainly because China has direct physical proximity as well as established transportation links with Central Asia. The signing of the FTA and establishment of International North South Transport Corridor (INSTC) would enable India to counter the growing Chinese influence in the Central Asia.
- Energy Security: Russia and Central Asian Countries are quite rich in energy sources such as petroleum, natural gas etc. The signing of FTA would enable India to diversify its energy sources and secure its energy security.
How to optimally utilise FTA?
Trade Logistics: India may fail to optimally utilise FTA due to lack of physical proximity and transportation links. Hence, there is a need for speedy completion of proposed International North South Transport Corridor (INSTC).
Visa Issues: India and EAEU should provide long term multiple entry visa for the benefit of businessmen so as to promote investment.
Language Barrier: India and Eurasian countries should nurture exchange of art and culture initiatives. Students exchange programs between the regions can also be enhanced.