Pakistan, Iran hold key to India-Central Asia economic relations

Pandit Jawaharlal Nehru was the first and the last Indian Prime Minister to visit all the five central Asian republics –Kazakhstan, Turkmenistan, Tajikistan, Uzbekistan, and Kyrgyzstan – together over five decades ago when they were part of the erstwhile Soviet Union (USSR). Nehru’s visit of the region had nothing to do with growing India’s economic relations there. The rhapsodised mountains, scenic beauty, and the culture attracted Nehru to the region. Nothing beyond. The independent country-hood of the five states after the Soviet Union’s disintegration in the early 1990s did little to change India’s diplomatic relations with these republics beyond cultural ties. The massive oil and mineral reserves in the region immediately drew Chinese attention that shares borders with with these countries. China has built massive trade relations and made good investments in some of the states. The trade between India and the Central Asian region in 2014-15 stood at only around US$1.4 billion or less than two per cent of India’s global trade. The five countries together accounted for an import of $604 million worth goods and services from India and exported products valued at around $776 million.

Prime Minister Narendra Modi, who just completed a whirlwind tour of the region along with Russia, is making a somewhat belated attempt to build a closer, economic and strategic relationship with the central Asian region that overwhelmingly stood by India in support of the latter’s bid to become a permanent member of a revamped Security Council. However, much will depend on India’s ability to establish a reliable trade transit route with the land-locked nations. Kazakhstan President Nursultan Nazarbayev put it very diplomatically before the Indian Prime Minister that “the Central Asia links to the East and the West. It must also connect to the South, for that is how it always was. The reference to the South is obviously India. Central Asia is sandwiched between two big countries – Russia and China.

Although the United States has been pushing for the proposed $10-billion Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline to lift petro-products from the region, a more viable option could be the construction of the Kazakhstan-Turkmenistan-Iran rail link and India’s proposed investment in the Chabahar Port in Iran could be of help. A pipeline through Iran and Persian Gulf would also work. The lack of effective transit facility between the region and India, as of now, is holding the trade and investment facilities between India and the region. As Confederation of Indian Industry (CII) Director General, Chandrajit Banerjee, who accompanied the Prime Minister, pointed out, the commerce between India and Central Asia has potential for manifold expansion. However, turning this potential into a reality poses a major challenge to the Prime Minister and India’s diplomacy.

The disintegration of the Soviet Union has changed the geo-political colour of the region as these countries together formed the “northern frontier” of the Islamic world though they have remained directly unaffected by Islamic radicalism which has witnessed considerable violence and commotion in adjacent Xinjiang, Ferghana, and Chechnya feeding the ISIS movement with local recruits, interrupting peace in bordering Russia, China and Afghanistan. India, China and Russia are all interested in building and strengthening security co-operation with the region. Prime Minister Modi’s visit of central Asia started with Uzbekistan (July 6-7). Counter-terrorism, defence cooperation, cyber security, improvement of bilateral trade, Indian industrial investment in Uzbekistan, medical consultancy and tie up, including telemedicine links and conferences, tourism promotion and mutual cooperation under the Shanghai Cooperation Organisation (SCO) were among the important aspects featuring in the discussion and joint agreement between the two countries.

Strategically, the Indian Prime Minister’s Kazakhstan visit (July 8) yielded the most successful commercial result. It saw the two sides signing as many as five key agreements, including a defence pact to enhance bilateral military cooperation and a uranium supply deal. 

The two sides agreed to address the structural bottlenecks by way of India’s active participation in oil exploration and drilling in hydro-carbon rich Kazakhstan. It is one of the first batch of countries to support India’s civil nuclear cooperation programme, according uranium supply contracts with India. This is the second such contract offering a much larger quantity of uranium. Mr. Modi and Kazak President Nursultan Nazarbayev pledged to work together “to take economic ties to a new level.” A joint statement – Tej Kadam -- by the two heads of governments, released after the summit meeting, noted rising terrorism in several parts of the world as well as in the region. The two countries agreed “to continue active engagement in the fight against terrorism and extremism.”

In Turkmenistan, which Modi visited (July 10-11) on his return trip from Russia, the discussion between him and President Gurbanguly Berdimuhamedov focused on bilateral trade and cooperation in a number of areas, including north-south transport corridor for transportation of goods from India to central Asia and vice versa, economic, scientific, technological, and defence sectors. The two sides agreed to strengthen Joint Working Group on Energy and work on the TAPI pipeline project, forming a key pillar of economic engagement between the two countries. Turkmenistan welcomed India’s co-operation and technical participation towards its effort to further develop its hydrocarbon and petrochemical sectors.

On Sunday (July 12), Modi’s visit of Kyrgyzstan and meeting with President Almazbek Atambayev largely centred around defence cooperation and trade. The two sides reached an agreement to expand the existing defence and security cooperation. They agreed to conduct annual joint military exercises, exchange of military instructors and observers , military education and training, among others. Improvement of tourism also featured in the bilateral talks. India raised the issue of the over-land route of connectivity via Afghanistan and Iran to central as well as the seabed pipeline to connect Iran-Oman to Kandla or Mumbai. Gas from Turkmenistan and Azerbaijan can be fed into this line.

Unfortunately, except Kazakhstan, India hardly has trade ties with other countries in the region that is worth mentioning in detail. Yet, the fact remains that Uzbekistan is world’s six largest producer of cotton and ninth largest producer of gold besides having considerable natural gas resources. 

Kyrgyzstan has an estimated hydrocarbon potential of 140 billion kilowatt-hour per year out of which just 10 per cent is exploited. Indian industry is keen to cooperate with the region in a host of areas – from hydrocarbon exploitation, engineering, construction and pharmaceuticals to information technology. But, as of now, India needs a strong, reliable transit route.   IPA