US sanctions hit India-Kazakhstan plans to expand connectivity
Kazakhstan’s efforts to forge greater connectivity with India via an eastern expansion of the North-South corridor running through Iran have hit a speed bump because of US sanctions, a senior Kazakh official has said.
Despite the hiccup, Astana continues to be hopeful of building closer trade and transit ties with New Delhi through Iran’s Bandar Abbas port and even extending connectivity to the strategic Chabahar port once a new railway link is built.
Kazakhstan is focusing on India to attract investments and to access the country’s market of more than one billion people, the chairman of state-run Kazakh Invest, Saparbek Tuyakbayev, said on the margins of the Astana Economic Forum.
However, the transport of some goods via the Iran-Turkmenistan-Kazakhstan railway link to Bandar Abbas has been hit by sanctions imposed by the US, he acknowledged without giving details.
“We are interested in India as it is a market of over one billion people. But the level of investments is low compared to the potential and the main reasons are logistics and communications,” said Tuyakbayev.
Bilateral trade was worth almost $1 billion in 2017, with the balance in Kazakhstan’s favour. Kazakhstan is the largest supplier of uranium to India and both sides have strong defence and strategic ties.
Indian and Kazakh officials admit there is much scope to ramp up investments and trade, especially exports from India, including pharmaceuticals and food products.
India has been keen on the eastern expansion of the International North-South Trade Corridor (INSTC), and there are plans to connect Gujarat’s Mundra port to Bandar Abbas and then link it to the Iran-Turkmenistan-Kazakhstan railway link to cut the time for transporting goods from Central Asia and to access markets in the landlocked region.
Kazakhstan is also open to the idea of connecting the transit network to Chabahar, which is being developed by India, once Iran’s railway network is extended to the strategic port. Though Chabahar is exempted from US sanctions because of its role in transporting supplies to Afghanistan, the American restrictions have resulted in uncertainty about doing business in Iran.
People familiar with developments acknowledged the need to gain an economic foothold in Kazakhstan and use the country as a hub for business activities in Central Asia in the face of China’s growing presence through its Belt and Road Initiative, especially the funding of big ticket infrastructure projects.
The Observer Research Foundation (ORF), a Delhi-based think tank, recently recommended that India and Kazakhtsan should frame plans to overcome the sanctions. India should look at Kazakhstan as a stepping stone to the markets of Central Asia and develop a strategy to compete with China’s growing presence, ORF said.