India Gets In On Belt & Road Infrastructure By Building Highway In Tajikistan

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India’s softly growing influence to counterbalance China’s rise in Central Asia

Op/Ed by Chris Devonshire-Ellis

India, which is not officially a member of the Belt & Road Initiative, has nonetheless been undertaking its own form of infrastructure development by both funding and building an eight-lane highway in Dushanbe, the capital city of Tajikistan.

Relations between India and Tajikistan have traditionally been close and cordial. There has been a regular exchange of high level visits and important agreements, which helped in cementing the relations. During the visit of Tajik President to India in September 2012, the two countries declared their relationship to ‘Strategic Partnership’ encompassing cooperation in a wide spectrum of areas including political, economic, education, health, human resource development, defense, counter-terrorism, science and technology, culture and tourism. Tajikistan sees India as a counterweight to China, while India is keen to reassert some sense of influence over Central Asia, an area it has neglected in more recent years.

This has been generating some results. During his state visit to Tajikistan in October last year, Indian President Ram Nath Kovind announced US$20 million grants for projects to be mutually agreed upon, with the Dushanbe highway one of them.

Tajikistan Foreign Investment Opportunities

Tajikistan has foreign investment potential in hydroelectricity generation, power transport, mining, full chain of cotton processing, tourism, medical tourism to India etc. Indian private investments in Tajikistan include the 5-star Taj Palace hotelwhich was inaugurated by President Rahmon in September 2014. India’s KEC/RPG completed the construction of 116 km. long power transmission line from Sangtuda-1 Hydropower plant to the Afghan border in October 2010 under an ADB financed project. On a commercial contract, BHEL supplied a 7 MW generator to the Tajik company “Pamir Energy” in 2011. Kalpataru signed an electric power contract worth US$22 million for construction of electric transmission lines under ADB financing and finished the project in early 2017. The company subsequently won another US$35 million project in 2017 under the CASA-1000 power transmission development. There are other small Indian financed private projects/companies/ clinics, which provide healthcare and other services in Tajikistan.

India-Tajik Bilateral-Trade
India’s main exports are pharmaceuticals, apparel and clothing accessories, handicraft, machinery and meat and meat products. Different types of ores, slag and ash, aluminum, organic chemicals, herbal oils, dried fruits and cotton are exported to India from Tajikistan.

India-Tajikistan Bilateral Trade 2017-18

Category Amount (US$, millions) Growth Rate on Previous Year
Indian Exports 24 8%
Tajik Exports 50 120%

There is still some way to go – China-Tajik bilateral trade is currently running at about US$2 billion per annum, while Russia-Tajik trade runs at about US$750 million. Eu-Tajik trade is about US$410 million and US-Tajik trade about US$14 million. However the Indian trend is upwards while most of the others (except China) have been slowing their bilateral trade volumes.

Tajikistan – India Fast Facts

  • Flight Time Delhi-Dushanbe: 8 hours (one stop over)
  • Distance Between Delhi & Tajikistan Border: 1,350km
  • The populations of Bangalore, Chennai & Dushanbe are all @9 million
  • India and Tajikistan have a Double Tax Treaty between them
  • 1 Tajik Somoni = 7.5 Indian Rupees

 

India-Tajik Civil Projects

In 1995, India extended a credit line of US$5 million to set up a pharmaceutical plant. The Government of India thereafter converted the principal amount along with the accrued interest of US$3.37 million into a grant during the visit of Prime Minister of India in November 2003. With a further grant of US$600,000, a Fruit Processing Plant was established by HMTT in 2005. Another grant of US$600,000 followed, with an Information and Technology Centre (Bedil Centre) being commissioned in 2006. The project ran for full hardware cycle of 6 years and trained almost all the first generation IT experts in the Tajikistan government sector. Similarly, with about US$500,000 India set up a Modern Engineering Workshop and commissioned it in June 2011. The project is running successfully. India undertook rehabilitation and modernization of a 1936 vintage Varzob-1 Hydro Power Station through Bharat Heavy Electricals Limited (BHEL) and National Hydroelectric Power Corporation (NHPC). After renovation, the installed capacity was enhanced to 2×4.75 MW. The rehabilitated Power Station was inaugurated on 28 December 2012 and continues to run successfully. A project for setting up of computer labs in 37 schools of Tajikistan announced during Prime Minister’s visit in July 2015 was completed and delivered in August 2016.

As can be seen, Indian overseas infrastructure investment pales in comparison to that of Chinese state owned behemoths, which are often funded at low rates of interest – and sometimes none at all – by the Central Government. India meanwhile has carved out a niche in its paucity by allowing a more organic development, often realizing more substantial longer term results – its finding of the Tajik Governments IT experts just one example.

About Us

Silk Road Briefing is written by Dezan Shira & Associates. Chris Devonshire-Ellis is the Practice Founding Partner. The firm assists foreign investors into Asia and has 28 offices across China, the ASEAN countries, India and along the Belt & Road Initiative. Please contact the firm at asia@dezshira.com or visit us at www.dezshira.com

 

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