Courting Astana: Nazarbeyev’s India Visit and Beyond
Raghav Sharma
Research Officer, IPCS
e-mail: raghav@ipcs.org



Kazakhstan, with the largest proven oil reserves in the region and three of the world’s richest hydrocarbon fields, is hence of prime importance in India’s energy security policy formulation. The international branch of the Indian state-owned ONGC Videsh has begun investing in oilfields in Central Asia. ONGC has picked up a 15 per cent stake in the Alibekmola oilfield and is slated to invest to the tune of US $1.5 billion in the Kurmangazy oil field in the Caspian Sea – both of which are located in Kazakhstan. Kazakhstan also has large quantities of highly enriched uranium (between10,590-10,940kgs), making it the third largest uranium producer in the world after Canada and Australia. In addition the country has significant reserves of copper, gold, chromium, lead and zinc, for all of which India is a net importer. Although Central Asia’s share in India’s trade pie is a minuscule 0.08 per cent, however Kazakhstan accounts for precisely 50 per cent of this, that is, 0.04 per cent and it has been showing a modest but secular increase. 
Thus, in spite of India having a strong and evolving strategic interest in Tajikistan and convergence of security interests with Uzbekistan, it is Kazakhstan that has evolved as the principal axis of India’s relationship with Central Asia. Nazarbeyev’s invitation has hence, to be seen in the context of this particular dynamic. While New Delhi’s attempt at courting Astana and taking their relationship to a higher plane through the signing of a civilian nuclear agreement on 24 January and formally authorizing a joint venture between ONGC and Mittal Steel to acquire a 25 per cent stake in the Satpayev oil field in the Caspian Sea, are steps in the right direction, they remain a far cry from realizing the untapped potential that needs to be unlocked. 

If New Delhi hopes to attain any meaningful and sustainable engagement with the Central Asian region in general and Kazakhstan in particular, it needs to seriously address some of its key policy challenges. First, while India is increasingly realizing the need to diversify its sources of energy supply, vital to keep its economic engine in motion, and has thus started making small forays into Central Asia, it is not only outweighed by China but has failed to evolve a clear policy framework on how to transport Central Asian hydrocarbons to the Indian market or to utilize their potential through swap deal arrangements. For instance India could enter into swap deal arrangement with Iran, which would allow India to pick up oil and LNG from Iran, equivalent to what Kazakhstan delivers to Iran. A similar arrangement could be worked out in with China that could allow India to tap the hydrocarbon reserves in the Tarim basin in Xinjiang.

Second, even though Kazakhstan accounts for 50 per cent of Central Asia’s trade share with India, the levels of Indian trade and investment remain abysmally low, especially in light of prevailing geopolitical constraints. However, this is a challenge India must address if it intends to deepen and add weight to its engagement in this ‘extended neighborhood’ as Central Asian states look for foreign investment and alternatives to both Chinese and Western market players. One such alternative route to boost trade linkages is by exploring the possibility of trade linkages through land ports in Xinjiang in China. From an Indian perspective taking the Xinjiang route to Kazakhastan cuts the trade route by 2,500 kms and it is a far more stable route than other alternatives through Pakistan and Afghanistan. China too gains by transit fee generated but also by potential economic prosperity it could trigger in this otherwise disturbed province of China. Each of these routes pass through disputed territories in Aksai Chin and Kashmir but trade by creating wealth will also create joint interests that will work towards propelling the relationship further. 

Third, it is important to enhance people-to-people contacts between the two countries through tourism, trade education and cultural exchanges would add the much needed substance to the India-Kazakhstan relationship.

As India aims to establish itself as a player both on the regional and global stage, it cannot leapfrog its way up the ladder without engaging its strategically significant extended neighborhood of which Kazakhstan happens to be a significant component. Nazarbayev’s visit to India, rather than being merely portrayed as high point of our bilateral engagement should serve as a trigger for addressing some of the key challenges, outlined above, which in turn will determine the contours of our future engagement with Astana.

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