India reaching out to Central Asia.

May 26 2011 (TCA) -- In its geopolitical interests Uzbekistan is trying to balance between East and West in offering its gas resources. India has now reached out to Central Asia and is lining up along side of Russian and Chinese companies who signed major energy agreements with Central Asian countries.

Following the visit of Uzbek President Islam Karimov to India on May 17-18 the two countries signed documents on more than 30 joint projects worth approximately $2.2 billion.

These are projects aimed at joint exploration and production of hydrocarbons, production of fiber-optic cables, production of medicines, as well as the processing of cotton, silk and skins. Projects in the field of information and communication technologies include the production of smart phones, tablet PCs and Internet set-top boxes, as well as power sources based on solar-hybrid technology.

During the talks President Karimov and Indian Prime Minister Manmohan Singh coordinated their positions on Afghanistan, since stability there would facilitate the formation and development of cost-effective routes, reducing the distance between the markets of India and Central Asia. The level of trade and economic cooperation between the two countries is currently very low. India's share of trade with Central Asian countries is extremely low, less than one percent of their total turnover. Though the turnover between India and Uzbekistan in 2010 increased by 18 percent to $150 million, it totaled only 0.6 percent of Uzbekistan's total trade turnover.

"The main reason for the small number of Indian companies in the Central Asian market is the usual transportation and communication difficulties, since India does not border with any of [Central Asian] republics, and these republics have no outlet to the ocean," said analyst Anvar Jumayev. Therefore, India's government has to make greater efforts to create conditions for Indian companies to enter the Central Asian market.

India's government considers the situation in investment cooperation with the Central Asian countries to be far from favorable. "For the past ten years these countries have got credit lines worth $100 million. However, due to the small amount it should be regarded only as a political gesture of goodwill," believes expert Vitaly Paramonov.

In this regard the outcome of President Karimov's visit to New Delhi might be considered a significant breakthrough in stimulating investment by Indian companies in the economy of Uzbekistan and the entire Central Asia. The fuel and energy sector should be traditionally considered as the engine of this process.

The Indian side is particularly interested in exploration opportunities of natural gas reserves in the Ustyurt Plateau in Karakalpakstan. India's hydrocarbon companies are very interested in Uzbek gas. Its supply will be carried out along a transport corridor which will be built by Turkmenistan, Uzbekistan, Iran, Qatar and Oman.

"India, strongly dependent on imported energy, had no luck on tenders in the oil and gas projects in Central Asia," said Ilkhat Tushev, an analyst at Central Asia Investments. "Major players from the U.S. and Europe signed agreements to develop fields in Kazakhstan back in the 1990s. China, India's main competitor in the fight for global energy resources, has numerous assets in Kazakhstan and has built a pipeline to its northwestern border". According to Tushev, India may now try to catch up due to new contracts, particularly in Uzbekistan, but it is still too far from the practical implementation of these plans.

(THROUGH ASIA PULSE)