India, Russia target $100 billion bilateral trade by 2030, FTA with EAEU

India and Russia are looking to raise bilateral trade to $100 billion by 2030, balance the lopsided trade, eliminate non-tariff trade barriers, and explore the possibility of a Eurasian Economic Union (EAEU)-India Free Trade Area.

A joint statement issued after multiple rounds of talks between Prime Minister Narendra Modi and Russian President Vladimir Putin on Tuesday also announced that both nations plan to establish a bilateral settlement system using national currencies and introduce digital financial instruments into mutual settlements. Modi was conferred the ‘Order of St Andrew the Apostle’ award by Putin for his contribution to fostering bilateral ties between the two countries.

Delivering an unambiguous message on the ongoing Ukraine war, the prime minister told Putin that peace efforts do not succeed in the amid of bombs and bullets, and also flagged concerns over a deadly missile strike on a children’s hospital in Kyiv, saying “when we see innocent children dying, then it is heart-wrenching and that pain is very horrible.” The Russian president lauded Modi for “trying to find ways to resolve the Ukraine crisis, primarily through peaceful means”.

Economic collaboration, especially in energy, trade, manufacturing, and fertilisers, dominated the agenda during Modi's two-day trip to Moscow. Both sides have called for “increased supplies of goods from India to achieve balanced bilateral trade” and “reinvigoration of investment within the framework of the special investment regimes”.

“The major thrust of the discussion (between Modi and Putin) was on economic engagement… The two leaders have set a new target of $100 billion by 2030. Alongside, they have also agreed on the joint statement on economic cooperation, specifically till 2030,” Foreign Secretary Vinay Mohan Kwatra said in a briefing on the prime minister’s visit to Russia.

India’s bilateral trade with Russia stood at $65.6 billion in FY24, up 33 per cent year-on-year, and nearly 5.5 times higher than the pre-pandemic trade of $10.1 billion. The bilateral trade has increased especially since 2022 with Indian fuel importers snapping up discounted Russian crude despite repeated criticism by Western nations.

India also pushed for the need to broaden the trade basket between the two countries, especially with respect to the greater market access for goods both in the agriculture and industrial sectors. Greater cooperation in key energy sectors, including nuclear energy, oil refining, and petrochemicals also found mention in the document, with a focus on “facilitation of mutual and international energy security, taking into account the prospects of global energy transition”.

With exports to Russia only at $4.2 billion, both sides stressed the need for increasing the volume of trade in agricultural products, food and fertilizers. In 2023-24, India’s trade deficit with Russia stood at $57 billion.

Optimisation of Customs procedures through the application of intelligent digital systems for barrier-free movement of goods.

A lot of this trade is expected to take place through key global routes like the North-South International Transport Corridor, the Northern Sea Route and the Chennai-Vladivostok Sea Line, the two sides said.

A trade agreement between Eurasian Economic Union (EAEU) -- comprising Russia, Belarus, Kazakhstan, Kyrgyzstan, and Armenia -- was also discussed. “The two leaders also spoke about the need to move forward on the India Eurasian Economic Union trade goods agreement. We had one round of discussions between the two countries and it is expected that this would be expedited in the months ahead,” Kwatra said.

The statement has also called for the facilitation of entry of Indian and Russian companies in each other’s markets by creating subsidiaries and industrial clusters. Similarly, both have called for creating new joint (subsidiary) companies by providing them with favourable fiscal regimes.

Promotion of investments and joint projects across various sectors of digital economy, science and research, educational exchanges and internships for employees of high-tech companies have also been targeted.

Ukraine war

In his televised opening remarks at summit talks with Putin at the Kremlin, the PM said the killing of innocent children is heart-wrenching and very painful, a day after a suspected Russian missile struck a children’s hospital in Kyiv triggering global outrage. "Every person who believes in humanity is pained when there is a loss of lives. But when innocent children are killed it causes deep pain. I have spoken to you at length about this," Modi told Putin.

The prime minister's remarks that appeared to be critical of Russia came hours after Ukrainian President Volodymyr Zelenskyy criticised Modi for hugging Putin. "It is a huge disappointment and a devastating blow to peace efforts to see the leader of the world’s largest democracy hug the world’s most bloody criminal in Moscow on such a day,” Zelenskyy posted on X.

In his remarks, Modi also referred to his extensive discussions on the Ukraine conflict with Putin during a private meeting on Monday evening and said dialogue is the only way to find a solution. "For a bright future for the future generations, peace is most essential. No solution is possible on the battlefield. Solutions and peace talks are not successful in the midst of bombs, guns and bullets and we have to find the path to peace through dialogue," he said.

"For restoration of peace, India is ready to cooperate in all possible ways," Modi said, as he appreciated the attention Putin paid to the most pressing issues, “including your efforts to find ways to resolve the Ukraine crisis, primarily through peaceful means."

Modi's first international visit after he took charge as Prime Minister for the third time, the trip to Russia has been closely watched owing to its geopolitical implications. In the run up to the trip, the Kremlin had claimed the West was jealous of the visit while the US State Department said it has made quite clear directly with India its concerns about India's relationship with Russia.

During the day, both leaders were also shown a permanent working model of the VVER-1000 reactor used at Kudankulam Nuclear Power Plant in Tamil Nadu, manufactured by the Russian Atomic Agency Rosatom.

The Prime Minister also interacted with the Indian community in Russia, where he announced the government has decided to open two new Indian Consulates in Kazan and Ekaterinburg. The two-day trip also saw the PM pay his respects at Moscow's tomb of the unknown soldier, dedicated to the Soviet soldiers who lost their lives during World War II.

In the evening, the PM left in Vienna. It will be the first visit by an Indian prime minister to Austria in over 40 years, the last being of Indira Gandhi in 1983.