[Burning Issue] Ashgabat Agreement

Why in News?

In February 2018, India had joined the Ashgabat Agreement.

What is Ashgabat Agreement?

The Ashgabat agreement is a multimodal transport agreement that envisages the creation of an International Transport and Transit Corridor connecting Central Asia with the Persian Gulf. The corridor being multimodal will consist of road, rail and sea transport.

Significance for India

  1. Easing of trade barriers and simplifying procedures for movement of goods between signatory states.
  2. Connectivity to the Central Asian Region
  3. Due to the lack of direct land connectivity, India’s bilateral trade with Central Asia has taken a hit – the trade stands at meagre USD 1 Bn approx. The agreement can address this and will help India diversify its trade market and also its trade basket.
  4. It will make it easier for India to tap the strategic and high-value minerals in Central Asia including uranium, copper coking coal, etc which will give a boost to India’s manufacturing economy.
  5. These countries are located strategically and act as a junction point between India and Eurasia. Thus, connectivity to this region will also facilitate India’s trade relation with other Eurasian countries.
  6. Link with Iran
  7. Iran is India’s gateway to Eurasia, and thus an important link in the International North South Transport Corridor (INSTC).
  8. India has also planned to construct a railway between Chabahar to Zahedan. Now, India is considering an enhanced role for Chabahar port by integrating it with INSTC and the proposed transit corridor under Ashgabat Agreement.
  9. With respect to International North South Transport Corridor (INSTC)
  10. The Iran-Turkmenistan-Kazakhstan (ITK) railway line which became operational in 2014 and is included as part of INSTC will also be the major route under the Ashgabat Agreement. Therefore, the Ashgabat Agreement will be easily synchronized with other ambitious infrastructure initiatives of India in the region.
  11. Connectivity to Eurasia
  12. For Eurasia, container transport plays a significant role. And for India to join the competitive situation in the Euro-Asian transit system, active participation in transportation projects like this is essential.
  13. Connectivity to Commonwealth of Independent States (CIS)
  14. CIS had a share of mere 0.91% in India’s exports and 2% in its imports during 2015-16, with Russia being the most important trading partner accounting for about 65 percent of India’s trade with the CIS.
  15. This agreement will help in expanding India’s connectivity options with CIS region at large thus opening up new markets for India’s trade.
  16.  India’s accession to Ashgabat Agreement will further pave the way for the integration process under the Eurasian Economic Union (EAEU) and Shanghai Cooperation Organization (SCO).

Conclusion

The Ashgabat agreement will help in securing India’s energy needs as well, by diversifying import market. However, India need not be limited to increasing trade and commerce but should aim to enhance investment and services, interlinking sources of raw material, centres of productions and markets between India and the Eurasian region at large.

Expected Questions

  1. Discuss the reasons behind India joining the Ashgabat Agreement recently?
  2. What is Ashgabat Agreement? Mention its strategic and economic significances for India?
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