New Delhi: Central Asia’s strategic location as a land bridge between Asia and Europe imbues it with undeniable geopolitical significance for India. This partnership encompasses a broad spectrum of shared interests, including security, energy, and other economic and commercial opportunities, according to a new joint study released by the India Exim Bank and the Eurasian Development Bank (EDB).
The report titled ‘Exploring Trade and Investment Relations between India and Central Asia: Unlocking Economic Benefits’ highlights an immense untapped potential in India-Central Asia economic relations and provides actionable policy recommendations for deepening bilateral cooperation. The report states that the bilateral trade between India and Central Asia stood at $1.7 billion in 2023, with strong scope for expansion in pharmaceuticals, machinery, textiles, petrochemicals, agribusiness, and ICT.
India’s trade relations with Central Asia underwent a significant shift in the past decade. Uzbekistan emerged as the preeminent export destination, capturing a substantial 45.3 per cent of India’s total exports to the region. Kazakhstan, while maintaining a robust presence, accounted for 35 per cent of India’s exports in 2023. Tajikistan, Kyrgyzstan, and Turkmenistan followed, with shares of 6.9 per cent, 6.6 per cent, and 6.1 per cent, respectively.
The import landscape presented a different picture. Kazakhstan was India’s primary supplier from the region, contributing over 64.5 per cent to the region’s total imports in 2023. Turkmenistan commanded a decent 21.7 per cent share. Uzbekistan contributed 10.6 per cent to India’s imports from the region, while Tajikistan and Kyrgyzstan had more modest shares of 2 per cent and 1.2 per cent, respectively. India has invested about $1.5 billion in Central Asia (2010-2023), mainly in coal, oil, gas, renewable energy, and textiles.
Sectors like renewable energy, healthcare, food processing, and logistics are emerging as priority areas. The policy recommendations in the report include collaboration on Digital Public Infrastructure (DPI), such as joint payment systems, enhancing trade finance access for MSMEs, improving transport connectivity via INSTC, and promoting joint ventures and knowledge transfer.
With mineral resources, increasing diversification of economies, and a growing focus on regional cooperation, these landlocked nations have the potential to be integrated as important players in the global economy.
The recent merchandise trade performance of these nations has been characterised by a rapid expansion of trade volumes; exports heavily concentrated in a few primary commodities; and trade partnerships limited to a few countries, the report added.
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