India – Central Asia Summit: Key Outcomes and Expectations for Trade and Investment

Posted by Written by Melissa Cyrill Reading Time: 5 minutes

India and Central Asia held their first summit on January 27 and agreed to hold the next one in 2024. Changing realities in Afghanistan, China’s outsized presence, and the need for more export markets provide India with renewed impetus to seriously engage with the five Central Asian countries. By holding these summits every two years, India wants to strengthen connectivity links to the land-locked Central Asian region and boost regional trade and commerce. Moreover, investment prospects exist in Central Asia’s tourism, healthcare, and education sectors, besides sustainable development goals.

India-Central Asia summit

On January 27, Prime Minister Narendra Modi hosted a virtual summit with the leaders of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. The inaugural India-Central Asia summit establishes ground for future institutionalized cooperation and will be followed by a summit-level meeting every two years.

The five Central Asian leaders – Kazakhstan’s Kassym-Jomart Tokayev, Kyrgyzstan’s Sadyr Japarov, Tajikistan’s Emomali Rahmon, Turkmenistan’s Gurbanguly Berdimuhamedov, and Uzbekistan’s Shavkat Mirziyoyevwere – had initially been invited as guests of honor at India’s 73rd Republic Day celebrations on January 26, but this was cancelled after a fresh wave of coronavirus cases hit the country.

Geopolitical developments necessitate summit mechanism

The joint summit marked 30 years of India establishing diplomatic ties with the Central Asian region. Several regional developments in recent years have shifted New Delhi’s priorities when assessing its ties to the region.

On one hand, China has continued to build upon its already expansive trade and economic relations with Central Asian countries, including through infrastructure investments along the Belt & Road Initiative and Eurasian engagement. During a virtual meeting of the ‘China plus Central Asia’ grouping, on January 25, Chinese President Xi Jinping stated that he was prepared to open “the vast China market” to Central Asian exporters and that China would “import more quality goods and agricultural products from countries in the region” besides continuing to hold the China-Central Asia economic and trade cooperation forum and working to increase bilateral trade to reach US$70 billion by 2030. Xi also proposed the setting up of a dialogue mechanism on e-commerce cooperation between China and the Central Asian region.

On the other hand, closer home, a Taliban-led government has taken force in Afghanistan – creating new potential for security disturbances and posing vulnerabilities for regional trade and connectivity. Central Asian countries have also established closer ties with Pakistan and do not share New Delhi’s priorities on Afghanistan.

Together, these developments have dramatically changed stakes for India’s engagement with Central Asia. And, irrespective of their differences, all stakeholders would agree on the need for a peaceful, secure, and stable neighborhood.

Consequently, holding biennial summit-level talks should increase India’s relevance to Central Asian countries as a reliable economic partner whose security concerns need to be considered during future regional security and diplomatic talks.

Outcomes of inaugural India – Central Asia Summit

In speaking directly with the Central Asian presidents, Modi offered to boost India’s connectivity links and trade with the region and foster people-to-people contacts. He also remarked on India’s existing partnerships with Central Asian countries – partnership with Kazakhstan on energy security, with Kyrgyzstan in the field of education and high-altitude research, with Tajikistan on security, and with Turkmenistan in the field of regional connectivity via the Asghgabat Agreement.

During the summit, India and Central Asian leaders agreed to regular meetings of Foreign Ministers, Trade Ministers, Culture Ministers, and Secretaries of the Security Council to prepare the groundwork for future summits. An India-Central Asia Secretariat in New Delhi will be set up to facilitate the new summit mechanism. India also decided to set up Joint Working Groups at the senior official level on Afghanistan and regarding the use of Chabahar Port.

As per the Delhi Declaration following the Summit: “India and the Central Asian member countries of the International North-South Transport Corridor (INSTC) as well as the Ashgabat Agreement on International Transport and Transit Corridor called upon the other Central Asian countries to consider joining these connectivity initiatives. The sides supported India’s proposal to include the Chabahar Port and noted Turkmenistan’s proposal to include the Turkmenbashi Port within the framework of INSTC.” India also “welcomed the interest of Central Asian countries to utilize the services of Shahid Beheshti Terminal at Chabahar Port for facilitating their trade with India and other external markets.”

Modi suggested that stakeholders prepare a roadmap for the next 30 years, as per comments from Ministry of External Affairs Secretary (West) Reenat Sandhu. Joint counter-terrorism exercises can be held between India and Central Asian countries should they indicate interest.

In the background

India-EAEU FTA talks

New Delhi is engaged in free trade agreement (FTA) talks with the Eurasian Economic Union (EAEU). So far, Russia has backed India’s initiatives to improve its presence in Central Asia and Eurasia.

India-Uzbekistan relations

Preparing ground to explore a preferential trade agreement

India and Uzbekistan fast-tracked talks for a bilateral trade pact ahead of the India – Central Asia summit. If concluded, this would be India’s first trade agreement with a Central Asian country, though much ground has to be covered to reach that point. In September 2019, India and Uzbekistan agreed to conduct a joint feasibility study that would set the base for negotiations for a preferential trade agreement (PTA). An India-Uzbekistan PTA would speed up linkage to the landlocked Central Asian region as well as create access to markets in Tajikistan and Kyrgyzstan.

Trade in 2021

In 2021, in the period between April to November, Indian exports to Uzbekistan reportedly amounted to US$176.22 million and imports from Uzbekistan were worth US$14.58 million.

Key export items were pharmaceuticals, mechanical equipment, auto parts, services, and optical instruments and equipment. India mostly imported fruits and vegetable products, juice products and extracts, lubricants, fertilizers, and services from Uzbekistan.

Bilateral agreements for sector-wise cooperation

In December 2020, the two countries inked nine agreements for cooperation in a range of areas, including new and renewable energy, digital technologies, cyber security, community development projects, and in sharing of information on movement of goods. India and Uzbekistan are also working on a fresh bilateral investment treaty (BIT) as their previous BIT (2000-2017) was terminated.

Indian firms invested in Uzbekistan

Indian investments in Uzbekistan cover pharmaceuticals, auto components, and the hospitality industries. Indian firms like GMR are interested in developing airports, air corridor, and cargo infrastructure in Uzbekistan. In the education sector, India’s Amity University has set up a campus in Tashkent and Sharda University has opened a campus in Andijan. India has also made moves to develop the start-up ecosystem in Uzbekistan, such as through cooperation with Indian institutions like iCreate. Another player involved in the field of research, technology, start-up, and innovation is DevIT, which has entered into agreements with partners in Uzbekistan. In the energy domain, India’s NTPC (National Thermal Power Corporation Limited) has participated in tenders in Uzbekistan for solar PV power plants and consultancy assignments for gas projects.

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