India-Russia Trade Relations and Tariff Challenges: A Strategic Outlook

Introduction
On 20th August 2025, during the 26th Session of the India-Russia Inter-Government Commission for Trade, Economic, Scientific, Technological and Cultural Cooperation (IRIGC-TEC) held in Moscow, External Affairs Minister S. Jaishankar highlighted the challenges posed by tariff and non-tariff trade barriers. The meeting, co-chaired by India and Russia (led by First Deputy Prime Minister Denis Manturov), discussed strengthening economic engagement and finalizing the terms of reference for a Free Trade Agreement (FTA) between India and the Eurasian Economic Union (EAEU).

This meeting gains significance in the backdrop of U.S. President Donald Trump’s imposition of penalty tariffs on India, which was reportedly aimed at influencing India’s trade with Russia amid the ongoing geopolitical tensions related to the Russia-Ukraine conflict.

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Key Highlights of the Meeting

1. Trade Barriers and Logistics

   • Removal of tariff and non-tariff barriers.

   • Addressing bottlenecks in transport and logistics to facilitate seamless trade.

   • Enhancing connectivity through corridors like:

     • International North-South Transport Corridor (INSTC)

     • Northern Sea Route

     • Chennai-Vladivostok Corridor

2. Payment Mechanisms

   • Efforts to streamline payments in bilateral and regional trade.

3. India-Eurasian Economic Union Free Trade Agreement (EAEU FTA)

   • Finalization of the terms of reference.

   • Aims to remove obstacles for overland trade between Russia, India, China, and Central Asian countries.

4. Trade Imbalance

   • India-Russia trade rose sharply from $13 billion in 2021 to $68 billion in 2024-25.

   • Earlier trade deficit of $6.6 billion has surged to $58.9 billion, largely due to hydrocarbon imports from Russia.

   • Urgent need to balance bilateral trade through diversified goods and services.

5. Geopolitical Context

   • Meeting held against a complex global backdrop, including Western sanctions on Russia and tariff pressures from the U.S.

   • Jaishankar emphasized maintaining strong India-Russia ties while navigating international trade challenges.

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Strategic Significance

• Energy Security: India imports bulk of hydrocarbons from Russia, ensuring energy diversification.

• Regional Connectivity: INSTC and Chennai-Vladivostok Corridor strengthen trade links with Central Asia and Russia.

• Geopolitical Balance: Managing relations with U.S., Russia, and Eurasian countries amid sanctions and tariffs.

• Economic Diplomacy: Push for EAEU FTA demonstrates India’s proactive engagement in regional trade architecture.

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Relevance for UPSC Aspirants

General Studies Paper II (IR & Economics):

• India-Russia strategic and economic ties.

• Role of Free Trade Agreements (FTAs) in bilateral and regional trade.

• Impact of tariff and non-tariff barriers on India’s exports and imports.

General Studies Paper III (Economy & Infrastructure):

• Trade imbalance and its management.

• Energy security and hydrocarbon imports.

• Importance of trade corridors and logistics.

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Prelims-Style Questions

1. The India-Eurasian Economic Union FTA aims primarily to:

   • A) Reduce tariffs and trade barriers ✅

   • B) Increase military cooperation

   • C) Promote tourism

   • D) Restrict Chinese investment

2. The International North-South Transport Corridor (INSTC) connects:

   • A) India, Russia, Iran, Central Asia ✅

   • B) India, U.S., Europe

   • C) India, China, Japan

   • D) India, Africa, South America

3. India’s trade with Russia in 2024-25 was approximately:

   • A) $13 billion

   • B) $25 billion

   • C) $68 billion ✅

   • D) $100 billion

4. Bulk of India-Russia trade consists of:

   • A) Agriculture

   • B) Hydrocarbons ✅

   • C) Electronics

   • D) Automobiles

5. Tariff imposed by the U.S. on India was reportedly aimed at:

   • A) Promoting India-U.S. trade

   • B) Ending India-Russia trade influence amid Ukraine crisis ✅

   • C) Encouraging Indian FDI in U.S.

   • D) Restricting Indian exports to China

6. The Chennai-Vladivostok Corridor is primarily aimed at:

   • A) Maritime defense cooperation

   • B) Overland trade and connectivity ✅

   • C) Cultural exchange

   • D) Space collaboration

7. Which country is a leading proponent of the India-EAEU FTA?

   • A) China

   • B) Russia ✅

   • C) Japan

   • D) Germany

8. Non-tariff barriers include:

   • A) Import duties

   • B) Export taxes

   • C) Regulatory restrictions and standards ✅

   • D) Currency depreciation

9. India-Russia bilateral trade imbalance in 2024-25 was approximately:

   • A) $6.6 billion

   • B) $25 billion

   • C) $58.9 billion ✅

   • D) $100 billion

10. Which of the following is NOT a connectivity project mentioned in India-Russia trade discussions?

    • A) Northern Sea Route

    • B) INSTC

    • C) Chennai-Vladivostok Corridor

    • D) Belt and Road Initiative ✅

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Conclusion

The 26th IRIGC-TEC meeting highlights India’s strategic economic diplomacy amid a complex geopolitical environment. Key takeaways for UPSC aspirants:

• India actively balances trade, energy security, and geopolitics.

• Regional trade agreements like the EAEU FTA can help reduce trade imbalances.

• Connectivity projects (INSTC, Chennai-Vladivostok) enhance overland and maritime trade.

• Understanding such developments is crucial for Mains (GS-II/III) and Prelims, particularly in topics like international trade, FTAs, tariff barriers, and India’s foreign policy.