10. India’s Objectives in Central Asia

Abstract

Policy makers and analysts in India believe that Central Asia is important because of old cultural and civilizational linkages; strategic location; energy resources as well as trade & economic opportunities. The country has a rich tradition of Central Asian studies. Traditionally, most of the academic work on the region was concentrated either on historical and cultural linkages or part of the broader Soviet Studies. In the last two decades some new research based on geopolitics and geo-economics has also emerged. Despite the intentions and rhetoric, India was never really part of any competition there during the initial phase of the so-called New Great Game in the 1990s. With no direct road transportation access plus difficult market conditions, the region did not become attractive to Indian private companies. In the post-socialist period, economic relationship with the region had also declined considerably. Still, Indian policy makers were comfortable in dealing with Central Asian authoritarian leaders as they had provided stability and were committed to fight religious terrorism. Moreover, many in India also believed that Russia will continue to have a decisive role in Central Asia because of its advantage of history and geography. Now as China has increased its engagement in the region and created a huge profile for itself through trade, energy deals, military agreements and the SCO, India is watching carefully. In addition, developments in Afghanistan, particularly in the background of difficult India-Pakistan relations, have also added a new dimension to India-Central Asia relations. The failure of Afghanistan project poses common security challenges but any positive outcome will open tremendous economic opportunities to both India & Central Asia. These two factors has increased strategic significance of the region considerably and may be fueling India’s still developing “forward” Central Asia policy in the coming years. Building on its past linkages and goodwill, India has developed strong political and developmental relations with all Central Asian countries, including a “strategic partnership” and an agreement on uranium trade with Kazakhstan. Although India has been trying in the energy sector for quite some time, concrete results have emerged only recently with an agreement on 25% stake in Satpayev block in Kazakhstan. TAPI is still very much on the agenda. Its current trade with Central Asia is small and likely to remain modest in the coming years. However, the importance of regional trade should be understood in the context of India’s rapidly increasing continental trade. It is expected that by 2015, India’s trade with Europe, CIS plus Iran, Afghanistan and Pakistan would be about $500 billion annually. Even if 20 % of this trade were conducted through road, about $100 billion of Indian trade would be passing through Central Asia & Afghanistan. With a possibility of this trade passing through the region, most infrastructural projects planned by multilateral organizations in Central and South Asia will also become economically viable. Central Asia also provide good investment opportunities for Indian business as shown by London-based Indian steel tycoon Laxmi Mittal, who owns 6 million ton capacity steel plant in Kazakhstan employing more than 40,000 people. At the moment India is not really connected with Central Asia through any significant regional organization. In the absence of any other organization linking Central and South Asian regions, the SCO may fill this gap. In an uncertain Afghan situation, the SCO may also play an important role in post-2014 Afghanistan. Realizing these possibilities, it is likely that India would be joining the organization soon. India’s another major initiative in the region along with Russia and Iran was building a new trade corridor, the International North South Transport Corridor (INSTC) in the 1990s. Later, many other countries have joined the project. The main transport project undertaken in this initiative by India is the development of a new port complex at Chabahar on the Iranian coast, from where a road goes to Afghanistan. It is closer to India than the existing port at Bandar Abbas. India is also planning to construct a 900-km railway line that will connect the Chabahar port with Hajigak region of Afghanistan, where a consortium of seven Indian companies led by the Steel Authority of India has won a $10.3bn deal to mine three iron ore blocks. India has also completed the construction a 218 km road link from Zaranj on the Iran-Afghan border to Delaram from where all major cities in Afghanistan and further north Central Asian republics are connected. Despite ambitions, the INSTC has not really taken off in the last one decade. One of the main reasons behind this has been still low volumes of India-Russia trade which was suppose to provide major traffic. However, it seems that Indian government is again going to give a big push to this corridor in the coming years. With a broad understanding that peaceful and stable Afghanistan is crucial for regional stability, India is also playing an active role in Afghan reconstruction with a commitment of worth $2 bn. To upgrade the relationship, India also signed a “strategic partnership” with Afghanistan in 2011. Indian engagement in Afghanistan has also boosted its policy towards Central Asia. High economic growth in both Central and South Asian regions is pushing policy makers to work for integration strategies. As a big fast growing economy, India is an attractive market for both the regions. Regional economic integration is also important for sustainability for Afghanistan as ultimately it has to play its traditional role of facilitating trade and commerce through its territories. So India is positive about the New Silk Road Strategy outlined by the US administration. This was a good blueprint for Afghanistan but unfortunately has been mixed with regional geopolitics and exit strategies from Afghanistan. Overall, compared to modest trade in South and Central Asia, continental trade is going to be much more important for India. As a result, plans for linking India and Europe through Afghanistan and Central Asia will be much more valuable rather than just thinking in some regional or sub-regional context. UNESCAP plans of Asian highway perfectly fit within Indian framework. Different infrastructural plans, like the SAARC multi-model transport linkages, CAREC action plans, INSTC etc. are all in a way different pieces of this grand design. Ultimately Indian trade volumes will be reaching Europe through these different schemes. Further synergies between the SAARC and CAREC will improve their effectiveness and scope. Despite serious problems in implementation of regional integration strategies viz. difficult India-Pakistan relations and situation in Afghanistan, there are some positive signs. These include signing of Afghanistan-Pakistan Trade and Transit Agreement as well as positive developments on India-Pakistan trade matters.