India-Central Asia Ties GS: 2 (International Relations) "EMPOWER IAS"

 

In news:

• In his speech at the Shanghai Cooperation Organization (SCO) meet last month, PM Modi stressed on commitment for increasing its connectivity with land-locked Central Asia.

 

Central Asia:

• Central Asia is a region that stretches from the Caspian Sea in the west to China and Mongolia in the east, from Afghanistan and Iran in the south to Russia in the north.
• This region consists of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan.
• All of these nations became independent in 1991 after the collapse of the USSR.

 

 

 

 

Historical ties with Central Asia

• India has had relations with Central Asia since the 3rd century B.C as the nations fell on route to the Legendary Silk Route.
• The Silk Route not only served as the medium for transportation of goods, silk, textiles, spices etc but also facilitated dispersion of thoughts, ideas, religion and philosophy.
• Buddhism found inroads in several of Central Asian cities such as Merv, Khalachayan, Tirmiz and Bokhara etc in form of Stupas and Monasteries.
• Babur in 1526 came from the fertile valley of Fergana (food bowl of Central Asia) to the dusty town of Panipat and established the mighty rule of Mughals in India.
• Men of prominence such as Amir Khusrau, Dehlawi, Al-Biruni, Abdur Rahim Khan i Khanan etc having Central Asian routes came and made their name in India.
• During the Soviet period- culture, music, dance, movies and literature bound the Soviet Republics closely with India. Popularity of iconic stars like Raj Kapoor, Nargis, and others brought India into the homes and hearts of common people of this region.
• Bilateral relations however suffered considerable neglect in the 25 years after emergence of these countries as independent States in 1991.

 

India-Central Asia Ties

• India has decades-old wish to connect with the resource and fuel-rich Central Asian nations.
• Since the emergence of the Central Asian Republics as independent countries in the early 1990s, New Delhi has been trying to establish ties with them.

 

Trade collaboration:

• India’s trade with the five Central Asian Republics—Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan and Tajikistan—was below $ 2 billion in 2018.
• The potential areas for collaboration include construction, sericulture and pharmaceuticals to IT and tourism.
• Much of this trade was routed through Iran, Russia or the United Arab Emirates (UAE).

 

Efforts for connectivity:

 

 

 

1. Turkmenistan–Afghanistan–Pakistan–India (TAPI) Gas Pipeline
2. Development of Iran’s Chabahar Port
3. Zaranj-Delaram Highway
4. International North-South (Transit) Corridor (INSTC)

China’s opportunism:

• China’s trade with Central Asia was $50 billion-$60 billion in the same period.
• The obvious advantage in China’s favour is geographical proximity.

What are the opportunities present in Central Asia for India?

Agriculture:

• Central Asia has huge cultivable areas lying barren and unproductive.
• Uzbekistan alone offers an enormous opportunity for the cultivation of pulses.
• Large quantities of pulses including kidney beans from the region are brought over by Turkish firms and are re-exported to India.
• Spices trade and horticulture also provide opportunities for improving trade relations.

 

Construction:

• The construction sector in Central Asia is experiencing significant growth.
• Kazakhstan, in particular, has created a competitive market for investments in this sector.
• Due to the economic growth, several areas within the region are becoming attractive for the construction business in residential, non-residential and civil engineering segments of the market.
• These are significant opportunities for Indian companies dealing with financial services, construction, engineering and management.
• Additional focus can also be given to connectivity projects.

 

Textile industry:

• Though Central Asia’s traditional sericulture and cotton textile industries have declined over the past years, they are becoming a major economic source for the rural population in Uzbekistan and Kyrgyzstan.
• After India and China, Uzbekistan is the third-largest producer of silk to the global market.
• Cooperation in silk manufacturing is one of the many opportunities present in Central Asia.
• It can ensure rural growth, poverty alleviation and job opportunities for both India and Central Asia
• High-quality cotton production from all Central Asian countries can be a boon for Indian textile industries.
• Both sides can consider setting up of integrated textile plants in the region to manufacture good quality cotton and blended fabrics.
• This initiative can be a profitable venture due to Central Asia’s location near the lucrative European markets.

 

Tea industry:

• Despite Indian tea’s popularity, the exports have dropped since 2012 because of competition from Kenya and Sri Lanka.
• This can be addressed by setting up tea blending and packing factories in Central Asia to offer high-quality Indian teas to the region.

 

Anti-China sentiments:

• Since 1991, Beijing has expanded its commercial footprint in Central Asian countries.
• While investing to buy hydrocarbons, China is flooding the markets with finished goods without any regard for the region’s indigenous industries and factories.
• Most of the investments from China come with Chinese workers and security personnel.
• The presence of Chinese security personnel has increased manifold after the 2016 bombing of the Chinese embassy in Kyrgyzstan
• China’s BRI investments lack transparency and are accused of bringing in debt traps for countries.
• Less resource-rich countries like Kyrgyzstan and Tajikistan already owe China an estimated USD 4 billion and USD 1.38 billion in loans respectively.
• These countries are forced to transfer greater control over the assets to China if they defaulted in the repayment of the loans
• This led to Beijing gaining the geostrategic advantage at the cost of food security of these countries
• Thus, the Central Asian countries are looking towards countries like India to balance China’s growing influence.
• While China’s increased engagement in the region has provided economic opportunities for these countries, it has provoked mistrust among its civil societies.
• This provides an opportunity for India to increase investments in the region.

 

Central Asia’s importance for India

• Fossil fuels: While Central Asia is seen as fuel-rich and, hence, important for an energy-starved India.
• Mineral richness: Central Asian states are also mineral-rich, and Kazakhstan, for one, has been a source of uranium for India’s nuclear power plants.
• Market for India: A country like India which is seen as a major economy has to have a presence in these markets. INSTC also offers a safe and cost-effective route to the EU (European Union) market.
• Convergence against Terrorism: India can forge a common position on terrorism and radicalization, which is a matter of concern to the region as much as it is to India.

 

Challenges in India and Central Asia Relations

Terrorism: -

• Some elements of these countries were supported to terrorist organizations. But at this time these countries are supporting India against terror.

Projects delayed by India: -

• Many problems arise due to the delay in Indian projects on time after its signing as recently seen in Iran's rail project.

Access to China: -

• China occupies an important place in the foreign policy of these Central Asian countries. Along with this, these countries are more dependent on China in terms of economic cooperation.

Russia's side: -

• Russia has established influence in these countries due to being part of the Soviet Union. In recent times, India's policies seem to be leaning towards the US. In such a situation, the engagement between Russia and China will affect India's relations with these countries.

 

India’s recent engagement

• Defence collaboration: In recent years, New Delhi has engaged with Central Asian Republics in the defence sphere through military exercises (say Ex Kazind).
• Engagement at UN: Political and economic engagement is also important, given the imperatives of working together at a body such as the United Nations (UN).
• Technological ties: India has set up universities there—Sharda and Amity are examples.

Scope for expansion

• Dairy Sector: There is scope for collaboration in the dairy sector.
• Pharma: Indian firms have been setting up pharmaceutical units in Russia that can serve these countries as well.
• Info Technology: IT and IT-enabled services are two other areas.
• Cultural connect: Bollywood movies are quite famous in these countries.

Way forward

• India needs to develop into stronger bonds of trade and commercial bonds which will be possible once the INSTC crystallizes.
• There is also need to realize a Free Trade Agreement (FTA) between India and the Eurasian Economic Union (EAEU) which has a potential of spurring the trade to 170 billion dollars from paltry 10 Billion Dollars.