Economic Cooperation between India and Central Asia

India and the five Central Asian republics-Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, and Tajikistan-share deep historical and civilisational links, yet their economic relationship has long punched below its potential. The reason is simple geography: Central Asia is landlocked, and no direct land route connects it to India. Despite this, trade and investment ties have been growing steadily, driven by genuinely complementary economic strengths. This post explains how the two regions cooperate economically, the sectors that anchor this partnership, the connectivity projects designed to unlock it, and the obstacles that still stand in the way.

Why the economies fit together 🔗

The foundation of this relationship is complementarity. India is a large, fast-growing economy with a strong manufacturing and services base, a sizeable consumer market, and surplus capital and technology. Central Asia, on the other hand, is rich in energy and mineral resources but has smaller domestic markets and a need for diversified trade partners. India offers scale, technology, capital, and manufacturing capacity, while Central Asia offers energy security, natural resources, and a strategic position in emerging Eurasian connectivity networks.

Both regions are among the world’s faster-growing economies. India’s GDP has crossed the $3.6 trillion mark, while Central Asia’s combined GDP stands at over $500 billion, with both sides continuing to post high growth rates. This shared momentum means there is a widening base of goods and services that each region can supply to the other.

What India exports and imports 🔗

The trade basket reflects this fit. India primarily exports pharmaceuticals, machinery, textiles, and processed goods, alongside emerging areas like petrochemicals, agribusiness, and information and communications technology. In return, India looks to Central Asia for minerals, metals, and energy resources. For example, aluminium from Tajikistan’s large TALCO smelter is a key export to India, while India supplies medicines and consumer goods in return. Among the five republics, Uzbekistan has emerged as the leading destination, accounting for over 45 per cent of India’s total exports to the region.

The state of trade today 🔗

Trade has grown but remains modest in absolute terms. Goods trade between India and Central Asia was around $1.7 billion in 2023, a sharp jump from roughly $500 million in 2010. A joint study by the India Exim Bank and the Eurasian Development Bank described this as evidence of immense untapped potential, with room to expand in pharmaceuticals, machinery, textiles, petrochemicals, agribusiness, and ICT.

To put the figure in perspective, $1.7 billion is small for two regions of this size-it is a fraction of India’s trade with single large partners. The gap between the current volume and the genuine potential is exactly what policymakers on both sides are trying to close.

Energy cooperation 🔗

Energy is arguably the most strategically important pillar of the relationship. As one of the world’s largest energy consumers, India needs reliable and diversified sources of fuel, and Central Asia holds vast reserves.

Uranium and oil 🔗

Kazakhstan, one of the world’s largest uranium producers, has become a cornerstone of India’s civil nuclear programme. Following high-level engagement, the supply arrangement was expanded so that Kazakhstan now accounts for roughly 80 per cent of India’s uranium imports. In the oil sector, India’s ONGC Videsh Limited holds a 25 per cent stake in the Satpayev oil block in the Caspian Sea, giving India a direct foothold in the region’s hydrocarbon assets.

The TAPI gas pipeline 🔗

The most ambitious energy project is the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. The plan is to transport natural gas from Turkmenistan’s giant Galkynysh field, through Afghanistan and Pakistan, to India. The project has been under discussion for over two decades and progress has been slow, but the pipeline’s construction within Turkmenistan was completed in 2024 and has been extended southward into Afghanistan. If completed, TAPI would give India direct access to Central Asian gas. However, the route runs through Afghanistan and Pakistan, which introduces serious political and security uncertainty.

Beyond goods: services and people-to-people links 🔗

Economic cooperation is not limited to commodities. Some of the most durable ties are built on services, skills, and knowledge sharing.

Pharmaceuticals and information technology 🔗

India is widely known as the “pharmacy of the world,” and affordable Indian generic medicines are in steady demand across Central Asia. Pharmaceuticals are explicitly identified as a sector with strong scope for deeper cooperation. Information technology is another natural area of collaboration. India has offered to share its Digital Public Infrastructure (DPI)-the population-scale systems behind digital identity and payments-and the two sides have agreed to establish a Digital Partnership Forum.

Technical training and capacity building 🔗

A quieter but significant form of cooperation is human resource development through the Indian Technical and Economic Cooperation (ITEC) programme. Launched in 1964, ITEC is a demand-driven programme offering training and capacity building to professionals from developing countries, with all expenses borne by the Government of India. The training spans subjects from banking and IT to pharmaceuticals, telecommunications, entrepreneurship development, and renewable energy. For Central Asian professionals, these courses build skills while strengthening goodwill-a clear example of how economic cooperation overlaps with soft power.

Solving the connectivity problem 🔗

None of this potential can be fully realised without solving the geographical hurdle. Because Central Asia is landlocked and there is no direct land link, goods must travel through third countries. India’s strategy rests on building reliable multimodal corridors that bypass Pakistan.

Chabahar Port and the INSTC 🔗

The centrepiece is Chabahar Port in Iran, which India has been developing as a gateway to Central Asia and Afghanistan. In May 2024, India signed a ten-year contract with Iran to upgrade and operate Chabahar Port facilities. The port feeds into the International North-South Transport Corridor (INSTC), a roughly 7,200-kilometre multi-modal network of ship, rail, and road links connecting India with Iran, Central Asia, Russia, and Europe. The corridor is designed to cut the time and cost of moving cargo compared with the traditional sea route through the Suez Canal. In a notable milestone, India shipped a cargo consignment from Mundra Port in Gujarat to Kazakhstan via the eastern route of the INSTC in March 2025.

The Ashgabat Agreement 🔗

Complementing these projects is the Ashgabat Agreement, a multimodal transport and transit pact linking Central Asia with the Persian Gulf. India’s accession entered into force on 3 February 2018. Joining the agreement lets India use existing land connectivity across Central Asia and Eurasia, and it works in synergy with both Chabahar and the INSTC to expand India’s westward trade options.

The institutional framework 🔗

To give this cooperation structure, the two sides have built dedicated mechanisms. The foreign-minister-level India-Central Asia Dialogue was launched in 2019, and a leaders’ summit followed. These platforms regularly take up connectivity, energy, and investment, alongside security concerns such as the situation in Afghanistan. At the fourth India-Central Asia Dialogue in June 2025, both sides stressed “optimum usage” of the INSTC and India backed the inclusion of Turkmenistan and Uzbekistan in the corridor. India’s broader approach to the region is framed by its “Connect Central Asia” policy, which integrates trade, energy, and connectivity goals.

The challenges that remain 🔗

Despite the momentum, real obstacles persist. The most fundamental is the absence of a direct route. Every corridor option depends on transit through Iran or Afghanistan, both of which carry political risk. The Chabahar route, for instance, has faced setbacks: the crucial Chabahar-Zahedan railway line has been delayed, partly because of sanctions on Iran, which forced India to step back from the project at one stage.

A second challenge is competition from larger players. China’s Belt and Road Initiative has financed and managed a large share of transport and infrastructure projects across the region, giving Beijing deep influence in both business and politics. Russia remains the traditional power in the region’s security and trade. India’s projects therefore operate in a crowded field, offering Central Asian states a valuable alternative to dependence on any single partner.

A third issue is the need to deepen the commercial relationship beyond declarations. Both sides have acknowledged that the partnership must move from rhetoric to substance through systematic government-to-government mechanisms, harmonised customs procedures, and better logistics and warehousing infrastructure connected to new transport corridors. Trade finance for smaller enterprises and the promotion of joint ventures are also seen as essential next steps.

Why this partnership matters 🔗

The growing interest is not accidental. The disruption caused by the Russia-Ukraine war pushed Central Asian states to seek more diversified trade partners and routes, and India fits that need well. At the same time, India is increasingly looking to the region as a source of strategic resources. With India dependent on imports for nearly 80 per cent of its critical minerals, tapping Central Asia’s reserves of rare earth elements has become a priority. In 2025, India entered a strategic partnership with Central Asian countries focused on rare earths and critical minerals. For both sides, the relationship is shifting from a matter of opportunity to one of strategic necessity.

What do you think? Given that almost every route to Central Asia depends on transit through politically uncertain neighbours, is India’s connectivity strategy through Chabahar and the INSTC a realistic path or an over-optimistic bet? And in a region where China and Russia hold the dominant positions, what should India prioritise-energy security, critical minerals, or building durable institutional ties-to make its presence count?

References

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