What Can Russian Businesses Sell As India Considers An Eurasian Economic Union Free Trade Agreement?

Какие товары и услуги Индия покупает в России?

Op/Ed by Chris Devonshire-Ellis

Russia and India are currently engaged in discussions concerning a Free Trade Agreement between India and the Eurasian Economic Union (EAEU), which consists of Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan. There are good reasons to believe that India will agree and that this will happen in 2020 as these markets offer Indian manufacturers and producers access to a combined EAEU market of 183 million people, while acknowledging that Russian businesses are less likely to be as disruptive to the Indian market as say for example the China alternative.

That concern over allowing China trade access was a primary reason that India pulled out of the RCEP deal. Russian businesses are more likely to be welcomed, and perceived as less of a threat in the Indian domestic market to India’s own MNC’s than Chinese ones – good news for Russian exports and investors.

Comments I made on this were recently highlighted in Japan’s Nikkei Asian Review last week.

Trade has been increasing in recent years, although is still way under the latent potential. Both are members of the BRICS grouping, while Indian Prime Minister Modi attended the Far Eastern Economic Forum in Vladivostok last year; I discussed the outcome of that in the article India-Russia Business Ties Developing In Energy, Shipping, Agriculture & Jewelry Fields.

India is in the market for oil and gas supplies, and has been buying LNG from Russia’s Yamal facility in the Arctic. India also sees opportunities for developing specific vessels to transport that gas, with a potential shipyard being in sited in Gujarat, Modi’s political base. The two countries have stressed their need to develop trade, with Prime Minister Modi and Russian President Putin pledging to raise bilateral trade to US$30 billion by 2025.

But what else do the two countries trade?

Russian Exports To India 
Exports of beans to feed Indian consumers have grown to US$14.5 million from just US$2 million in the past two years, while sales of sunflower seeds and other oil-producing crops have also increased. Russian radar equipment as well as compasses and other navigational products also became the important exports to India, while areas of growth include uncut diamonds, silver, mineral and chemical fertilizers, crude and petrochemicals, as well as machinery, synthetic rubber, polymers, plastic products, paper and other products.

Indian Exports To Russia 
Indian exports to Russia are on an upward trend, a situation that will further, and sharply increase should an EAEU FTA materialize. If so, this is good news for Indian producers of generic medicines, tea, canned vegetables, grapes and raisins, rice, coffee and coffee extracts and related consumables such as spices, herbs and essences.

Businesses in Russia looking to take advantage should be discussing business intelligence and market research programmes to properly define the size and accessibility of these respective markets – India is a huge country and a programme to maximize initial investments – and where – need to be developed.

This is where our firm can assist – Dezan Shira & Associates maintain offices in Delhi, Mumbai and Bangalore and can assist with developing business plans for Russian producers looking at the Indian market. Enquiries should be sent to Maria Kotova at india@dezshira.com

While I do not expect an India-EAEU FTA to be signed until later in the year, it is wise to prepare. Such an FTA will provide excellent opportunities for Russian businesses to access the Indian market, and time should be invested to understand where the opportunities lie.

Related Reading

• India Turns Down RCEP Free Trade. Will It Turn To The Eurasian Economic Union?
• Russia, India Want To Increase Bilateral Trade To US$30 Billion In Next Five Years