Look North: India looks towards Eurasian Bloc amid US tariff squeeze

Eurasian trade has been a mixed bag

With Trump’s tariffs threatening to squeeze India out of its biggest export market, New Delhi is casting its net wider. On August 20, it finalised the terms of reference for a free trade agreement (FTA) with the Eurasian Economic Bloc, which includes old partners Russia, Kazakhstan and Belarus, as well as newer allies Armenia and Kyrgyzstan.

The proposed free trade deal with the Eurasian bloc signals India’s bid to find new markets for key exports such as shrimps, textiles, footwear and jewellery as Trump threatens to double import duties on Indian goods to 50 percent. Such steep tariffs would amount to a near embargo, pricing Indian goods out of the US market.

A Moneycontrol analysis shows that India’s engagement with the bloc, excluding Russia, has been a mixed bag since the pandemic. Overall trade with the region halved to $1.2 billion in 2024, compared with $2.1 billion in 2019. This contraction largely stems from India’s reduced dependence on Kazakhstan for oil and chemicals, coupled with sanctions that have squeezed trade with Belarus.

Bright Spots: Armenia and Kyrgyzstan

Amid the broader slowdown, Armenia and Kyrgyzstan have emerged as outliers. India’s trade with Armenia surged nearly six-fold, rising from $40 million in 2019 to $223 million in 2024. Kyrgyzstan has also doubled its trade with India during the same period.

Exports have driven this momentum. India’s shipments to Armenia rose fivefold since 2019, making up more than 80 percent of bilateral trade. Key categories include precision equipment, arms and ammunition, and diamonds, which together accounted for half of India’s $186 million exports to Armenia in 2024.

Strategic Defence Links

The commercial uptick also reflects deeper strategic ties. Data from SIPRI highlights Armenia as one of India’s fastest-growing defence markets. Armenia accounted for 19 percent of India’s defence exports in 2024, while India supplied 17 percent of Armenia’s total defence imports. Major deals have included sensors, air defence systems, and missiles—helping Yerevan diversify away from Russia at a time of heightened regional insecurity.

Trade deal may also open a route to more exports within this category. Russia once had a 90 percent share in Armenia’s imports, which is now down to 76 percent. The country controls over 90 percent of defence import market in Kazakhstan and Belarus and 35 percent of Kyrgz imports.