Press "Enter" to skip to content

Why Central Asia Matters to India

Central Asia has been an important part of Indian history for centuries. But in the modern era, India has struggled to compete with Chinese money and Pakistani intransigence. Now, India finally has an opportunity to build influence in the energy-rich region by using its own unique advantages.

After decades of inertia, India and Central Asia are undergoing a process of finding and engaging each other again. Positive regional dynamics and the opening-up of Central Asia are resulting in myriad opportunities for both sides to build on their complementarities. While the European Union and the United States unveil new strategies for Central Asia, and China rolls out its Belt and Road Initiative (BRI), how does India fit into this sparsely populated yet geopolitically crowded landscape?

India and Central Asia are linked by civilizational ties going back to antiquity. Historically, the Kushan empire encompassed territories located in modern Uzbekistan and India. Babur, founder of the Mughal Empire, was born in Andijan (which is now in Uzbekistan). Before the advent of maritime trade in the 15th century, India and Central Asia were strongly connected by the Silk Route. They exchanged not just material goods such as silk, textiles and spices, but also ideas and religions.

After achieving independence in 1991 from the Soviet Union, the five Central Asian Republics (CARs) – Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan – focused on consolidating their newly gained sovereignty and building institutions and national identities. This initial period was characterised by deep mistrust between them. The countries fought over natural resources, notably water; for instance, Uzbekistan threatened war with Tajikistan over the construction of the Rogun Dam. Borders that were drawn up by Soviet authorities in the 1920s often cut across ethnic and linguistic lines, causing strife. The Tajik-speaking city of Bukhara ended up in Uzbek territory, for instance. There were also internal conflicts, such as the Tajik civil war and the Tulip Revolution in Kyrgyzstan.

Fast-forward to 2020. Once again, the region – with its rich endowment of natural resources and its location in the heart of connectivity corridors across Eurasia – is the scene of a so-called ‘New Great Game’.

Relative to other powers, India has kept a low profile while steadily building relations with the CARs. In 2012, the Connect Central Asia policy was announced at the first Track 2 level India-Central Asia Dialogue in Bishkek. In 2015, Prime Minister Narendra Modi visited all five republics, and in 2019, the Dialogue was elevated to ministerial Track1 level. The policy has further evolved to include dialogues like the India-Central Asia Business Council and India-Central Asia Development Group, which aim to devise and realise initiatives.

But geography and geopolitics have complicated India-Central Asia engagement. India shares no land borders with Central Asia and Pakistan has refused to allow transit of Indian goods through its territory. The region’s rugged topography has also limited India’s land connectivity with the region. Only recently have alternate routes, like the Chabahar port in Iran, been devised. Projects linking energy-rich Central Asia with energy-deficient India remain marred in logistical and financial delays. One example is the quasi-quixotic TAPI pipeline, which was meant to export natural gas from Turkmenistan to Afghanistan, Pakistan and India, but has remained impaired by threats posed by terrorist groups controlling parts of the transmission routes.

In 2018, trade between India and Central Asia stood at $1.5 billion. By contrast, that year, trade between China and Central Asia was a healthy $41.7 billion. But Central Asian society has grown wary of overwhelming reliance on China. Pockets of local discontent have emerged, including protests in Kyrgyzstan demanding reduced work permits for Chinese workers, and in Kazakhstan, based on fears of Chinese land grabs. There are also fears of heavy indebtedness to China, which already holds 53 percent of Tajikistan’s external debt. As a result, CARs are actively pursuing a multi-vector foreign policy – that is, avoiding dependence on a single outside power.

Despite suffering geopolitical difficulties and lacking China’s financial clout, India has its own niche areas to explore. The Indian private sector can play an active role in the information technology (ICT), pharmaceuticals and agricultural sectors – fields in which it enjoys a comparative advantage – through joint ventures with local Central Asian companies. These sectors are also critical to CAR economies as they diversify from an over-reliance on natural resources and labour remittances towards more high-tech, value-added activities. India must also take advantage of the simplified regulatory environment for investors; Uzbekistan and Kazakhstan’s recently recorded notable jumps in the World Bank’s Ease of Doing Business ranking.

The emergence of new mechanisms of regional cooperation – such as India’s accession to the Shanghai Cooperation Organisation (SCO) – also provide opportunities for greater interaction between Indian and Central Asian leaders. Initially set up as a border consultation mechanism, the SCO has increasingly broadened to include everything from security to economic cooperation. For Russia, India’s SCO accession is critical in balancing against China’s dominance in a region which Russia views as its own sphere of influence. Talks for a Free Trade Agreement (FTA) between the Russian-led Eurasian Economic Union (EAEU) and India are also ongoing, paving the way for further commercial cooperation and market access for Indian industries.

As long as connectivity is not perceived as a zero-sum game by Central Asian elites, the BRI is compatible with the International North-South Transport Corridor (INSTC), which aims at connecting the CARs to sea lines, while allowing Delhi to reach Afghanistan (and beyond) bypassing Pakistan. In 2020, India’s Union Budget allocated Rs 100 crore ($13.98 million) for the development of the Chabahar port – INSTC’s key pillar – following American reassurances that the port will be exempt from international sanctions against Iran.

Even though superficially, Central Asia is seen as a region of strongman autocracies, clear distinctions should be made between Turkmenistan’s isolationist regime, Tajikistan’s corrupt kleptocracy and Kyrgyzstan’s fragile embrace of parliamentary liberalism. A regional approach backed by strong bilateral ties – particularly with Uzbekistan and Kazakhstan that could act as India’s gateway to Central Asia – would be more beneficial than approaching the region as a homogenous whole. In this sense, discussions for a Preferential Trade Agreement between India and Uzbekistan are underway that could eventually pave the way for a future FTA. As for Kazakhstan, it remains a critical supplier of uranium to assist India with its goal of generating 25 percent of its electricity from nuclear power by 2050.

Interestingly, India-Central Asia ties are also developing at the sub-national level – what American scholar John Kincaid termed ‘paradiplomacy’. As foreign affairs analyst Shairee Malhotra argues, Indian states are becoming important actors in shaping Indian foreign policy. The agreement between Gujarat and the Uzbek region of Andijan – both industrial manufacturing hubs – is testimony to this. For example, cooperation in the pharmaceuticals sector with development of the Uzbek-Indian Free Pharmaceutical Zone in Andijan is enabling leading Indian companies to establish production facilities there.

Central Asia and India are no longer an afterthought in each other’s strategic thinking. Both sides should maximise opportunities posed by the current juncture and build on this positive momentum, facilitated by Central Asia’s new environment of cooperation. Old civilizational links and perceptions of India as a benign power provide a solid basis for India’s re-engagement with the region. The time is ripe for India and Central Asia to qualitatively and quantitatively take their relations to the next level.

Alberto Turkstra is Programme Director at Brussels-based think tank European Institute for Asian Studies (EIAS), where he focuses on Central Asia. He has also worked at the European Commission's Directorate-General DEVCO as Blue Book Trainee and then as Cooperation Officer for Yemen and Turkmenistan. He has lived and studied in 7 countries.