India will extend a $1-billion credit line to mineral-rich Mongolia, Prime Minister Narendra Modi announced in Ulan Bator on Sunday, amid a host of agreements in trade and defence as New Delhi tried to strengthen its influence in China’s backyard.
Modi and Mongolian Prime Minister Chimed Saikhanbileg upgraded ties to a “strategic partnership” – a year after a similar agreement between Mongolia and China – with New Delhi asking the land-locked country to partner in its economic transformation while vowing to step up bilateral trade and investment.
"The two Prime Ministers agreed to encourage development of equal and mutually beneficial trade, investment and economic cooperation, which is balanced, sustainable, and leads to prosperity in both countries," a joint statement said.
The PM and Saikhanbileg, who attended the traditional Mongolian Mini Naadam festival together, also noted intensified cooperation in civil nuclear domain, such as societal and industrial applications of radioisotopes, exploration and mining of radioactive minerals in Mongolia, and human resource development.
Dressed in traditional Mongolian costume, topped with a sola hat, Modi said he hoped his visit – a first by an Indian PM -- would usher in closer economic ties with both leaders agreeing to encourage Indian companies to explore opportunities in Mongolia's mining sector through joint ventures and investment.
The PM, who also shot an arrow from a traditional bow and was gifted a Mongolian horse, is on the second-leg of a three-nation Asian tour.
"Mongolia is also an integral part of India's Act East Policy. The destinies of India and Mongolia are closely linked with the future of Asia Pacific region. We can work together to help advance peace, stability and prosperity in this region." Modi said, calling the central Asian nation the new bright light of democracy in the world.
The PM and Saikhanbileg also watched wrestling, archery and horse riding at the Chingisiin Khuree Camp, 25 km from capital Ulan Bator.
Mongolia's economy -- fuelled by a mining boom that led to high rates of growth, peaking at 17.5 percent in 2011-- depends largely on trade with China. Yet it remains wary of China's economic dominance, which has prompted a rise in protectionist government policies and resource nationalism in the country of three million people.
Mongolia has also sought to strengthen relations with Japan and has maintained trading ties with neighbouring Russia, hosting President Vladimir Putin last year.
Infrastructure development in the central Asian nation has been hit by a slowing Chinese coal market and the Indian loan may primarily be used to fund an unfinished rail link from its coal mines in the Gobi desert to overcome bottlenecks in deliveries.
"India will continue to support Mongolia's endeavour to create a business friendly foreign investment regime," it said.
Officials also signed 14 agreements in areas such as policing and surveillance, air services, cyber security, renewable energy and civil nuclear regimes, with New Delhi gifting Ulan Bator with an indigenous cancer treatment machine.
"It is a special privilege to come on the occasion of two important milestones that unite us – 25 years of democracy in Mongolia and 60 years of diplomatic relations between our two nations. We have strong convergence of views on bilateral relations and our regional and international partnership," Modi said.
He later addressed the State Great Hural, the Mongolian Parliament, which was specially convened today on a holiday for the first time for a foreign leader, before visiting a monastery and posting a trademark selfie with Mongolian President Tsakhiagiin Elbegdorj on Twitter.