A full-fledged Free Trade Agreement between the Eurasian Economic Union (EAEU) and Iran came into force in May 2025. This landmark deal replaces a limited 2019 interim pact and dramatically expands preferential market access, covering about 90% of all goods traded between the two sides. Tariffs have been slashed – Iran’s average import duty on EAEU goods will plunge from roughly 20% to just 4.5% – creating immediate cost advantages and new export opportunities. Robust provisions on customs cooperation, standards, and dispute resolution further reduce barriers. Experts predict that these measures will nearly double EAEU–Iran trade to around $12 billion in the medium term, underscoring the agreement’s potential to boost growth across the region.
Key Sectors to Benefit
Multiple industries stand to gain under the FTA’s lowered barriers. Agriculture and food products are clear winners: EAEU countries can now export staples like grain and oilseeds to Iran more competitively (with new duty-free quotas for wheat and barley), while Iran’s food and agricultural exports enjoy easier access to Eurasian markets. Industrial goods and machinery will also benefit; the agreement eliminates or cuts duties on items such as corn, buckwheat, chocolate, sunflower oil, steel, fertilizers and farming equipment, spurring trade in manufacturing inputs and equipment. Iran’s energy and petrochemical sector is expected to expand exports into EAEU countries on the back of reduced tariffs and improved transit routes. Analysts further highlight high-value sectors like pharmaceuticals and information technology as poised for growth, given the enhanced market access – areas where both Armenia and India have competitive strengths. Overall, the FTA’s comprehensive scope lowers costs across these sectors, encouraging joint ventures and new supply chains that can include partners from India.
Armenia: A Strategic Gateway
Armenia offers unique strategic value as a launchpad for Indian firms targeting the EAEU and Iranian markets. It is the only EAEU member state sharing a land border with Iran, making Armenia a natural overland gateway between Iran and the rest of the EAEU. Companies operating in Armenia already enjoy tariff-free access to the entire EAEU market, and now under the FTA, goods “Made in Armenia” qualify for preferential (often zero) tariffs in Iran. In practical terms, an Indian manufacturer can establish a facility in Armenia and reach both a 180-million-strong EAEU consumer base and Iran’s 80-million market with minimal duties. The FTA is also catalyzing new transit and logistics infrastructure. Notably, it is expected to boost traffic along the International North–South Transport Corridor (INSTC) via Iran and revive the planned North–South highway through Armenia – trade arteries that can greatly facilitate India’s connectivity to Eurasia. This growing logistical network, combined with Armenia’s stable business climate and bilingual talent pool, enhances the country’s appeal as a regional hub. Observers even suggest that Armenia could host production projects serving EAEU, Iran and beyond – including India, which is itself exploring a trade pact with the EAEU – underscoring Armenia’s potential as a springboard into multiple markets.
Opportunities for Indian Exporters
Indian businesses can leverage these developments by using Armenia as a regional hub for trade and investment. Some strategic opportunities include:
• Distribution and Re-Export: Establish distribution centers or warehouses in Armenia to re-export goods into Iran and EAEU with minimal tariffs. With the new FTA, Armenian firms (including subsidiaries of foreign companies) enjoy preferential access to Iran, creating an avenue for Indian exporters to route products through Armenia for cost advantages.
• Joint Manufacturing: Partner with Armenian companies or set up joint ventures to manufacture or assemble products in Armenia. Goods labeled as “originating in Armenia” can enter Iran duty-free, and also move freely across the EAEU. Sectors like pharmaceuticals, machinery and equipment, processed foods, and textiles could especially benefit from local production bases. (Notably, Armenia’s pharmaceutical market is forecast to grow to $548 million by 2027, signaling untapped potential.)
• IT and Services Collaboration: Leverage Armenia’s growing tech and services sector. The FTA’s provisions on preferential access aren’t limited to goods – they also encourage cooperation in services. Indian IT firms can partner with Armenian tech companies to develop solutions for Iran and the wider region, capitalizing on Armenia’s talent pool and Iran’s emerging demand.
• Agriculture and Food Processing: Utilize Armenia as a processing hub for agricultural exports. For example, Indian tea, spices or raw materials can be processed or packaged in Armenia to qualify for “Made in Armenia” status, then exported tariff-free to Iran. Armenia’s agricultural and food processing sectors are poised to gain from the FTA, creating room for investment in food storage, packaging, and agro-tech by Indian firms.
Strengthening Connectivity and Co-Investment
Enhanced connectivity is making Armenia even more accessible for Indian businesses. Direct air links between Yerevan and New Delhi is expected to launch soon. This boosts business travel and could pave the way for expedited air cargo services. On the maritime side, India’s investment in Iran’s Chabahar Port and the INSTC complements Armenia’s transit role. Armenian Foreign Minister Ararat Mirzoyan has stressed the significance of Armenia-India-Iran trilateral cooperation in these projects, noting that Armenia is “deeply interested in promoting dialogue and cooperation” on the North–South Corridor and Chabahar initiative. Such high-level commitment means Indian logistics firms and investors can confidently plan long-term in Armenia. There are also co-investment prospects in infrastructure (road, rail, logistics parks) and energy. Iran and Armenia already collaborate in energy swaps, and the FTA framework could spur joint infrastructure projects like expanded pipelines or a railway link – areas where Indian investors could participate.
Armenia’s pro-business environment, coupled with its network of trade agreements, offers Indian companies a safe launchpad into regional markets. In recent discussions, Armenian officials have even floated the idea of joint production with partners to serve Eurasian markets. In fact, Iran aims to boost its trade with Armenia to $1 billion by the end of 2025, indicating strong demand that savvy Indian exporters could supply via Armenian channels.
The Armenia-India Business Council (AIBC) stands ready to help Indian entrepreneurs capitalize on these developments. Founded in 2024, AIBC is dedicated to fostering mutually beneficial commercial relations between the two countries. It provides a platform for networking, market insight and partnership development, actively facilitating connections between Armenian and Indian enterprises through forums, trade delegations and seminars. AIBC also collaborates with government bodies and local business communities to assist companies in navigating regulations and cultural nuances, ensuring smooth market entry and operations. For Indian businesses eyeing expansion via Armenia, AIBC’s on-the-ground support and deep regional network can greatly streamline the process – from identifying opportunities in high-potential sectors to connecting with trusted local partners. By leveraging AIBC’s resources and guidance, Indian companies can confidently navigate the new FTA-fueled landscape and accelerate their expansion into EAEU and Iranian markets, with Armenia as the strategic launchpad.