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India’s Growing Engagement With The South Caucasus – Analysis

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Throughout decades the South Caucasus has played a relatively minor role in India’s foreign policy. However, over the past several years there have been economic and political trends indicating India’s growing interests in the South Caucasus’ economic and infrastructural potential as well as a gradual emergence of New Delhi’s strategy towards the region.

Since the break-up of the Soviet Union the newly independent Georgia, Armenia and Azerbaijan, which constitute the South Caucasus region, began to attract large Eurasian and non-Eurasian states’ attention. Influential players so far have been the US, Russia, European Union (EU), Turkey, to a lesser degree Iran and a latecomer – China. India, however, which is one of the biggest and fast-growing economic markets in the world (seventh country in the world by nominal GDP; third country by GDP PPP; second-largest country by population) and has growing geopolitical ambitions spreading all along its vast land and maritime borders, has been notably absent from the South Caucasus’ geopolitical chessboard.

New Delhi has differing approaches to each of the region’s country, driven both by pure economic and political realism as well as economic preferences. What is common though is that despite the absence of common strategy towards the region, trends of cooperation between India and each of South Caucasus states are on the rise.

Georgia

There is a big potential for economic cooperation. So far, Georgia-India trade is of limited range, where Indian exports to Georgia are mainly meat and frozen meat, cereals (rice), electrical machinery as well as pharmaceuticals. Georgia, on the other hand, exports to India chemical (nitrogenous) fertilizers and metal (aluminum and zinc). As seen, the bilateral trade is limited and belongs to the secondary class of export. Both states have much larger potential to tap into. Georgia could increase its export of ores, metallurgical products, medical products, wine and other alcoholic and non-alcoholic beverages and processed agricultural products to the Indian market.

India, on the other hand could initiate its exports of cement, mineral fuels and plastic products to Georgia. There is also an untapped potential of India providing some advanced software engineering and IT solutions to the Georgian market. 

Much can be done in yet another untapped sphere – tourism. Though the number of Indian tourists visiting Georgia has been on the rise, in recent years there were multiple of cases of barring Indian citizens from entering the country. Thus throughout 2019 more than 4200 Indian citizens were denied entry into the country.

Moreover, the improvement of economic and tourist cooperation between the two states is also complicated by the fact that even today India does not have its own embassy in Georgia. It is the Indian embassy in Yerevan, which still oversees all Indian diplomatic affairs in Georgia.

Nevertheless, lately there have been important trends in the bilateral relations indicating upcoming improvements in the state of affairs. Recently Tbilisi and New Delhi launched free trade talks based on completed a joint feasibility study of a free trade agreement. The latter confirmed that a freed trade agreement will have a positive impact on bilateral trade.

Moreover, recently Georgia and India signed an Air Services Agreement (ASA) with the purpose of running non-stop flights with the low-cost airline IndiGo (InterGlobe Aviation Limited). The initiation of flights was planned for March 2020.

There also is work being done to remove a major obstacle in bilateral relations: opening of Indian Embassy in Georgia. The Georgian side has already notified India’s Ministry of External Affairs. This follows, albeit lately, the relations both states enjoyed from 1990s when India had recognized Georgia’s independence on December 26, 1991, following the collapse of the Soviet Union and had established formal diplomatic relations on September 28, 1992. Other efforts included the Georgian government’s decision to set up an honorary consulate in Delhi in 2005, which was then upgraded to a full-fledged embassy in 2009.

Armenia

Armenia’s relations with India are also experiencing interesting twists. For the past many years, beyond Russia’s geopolitical importance, China’s rise has been a subject of debates within the Armenian analytical community. Here too India has been largely absent. This is more surprising as India traditionally has good relations with Armenia’s key strategic ally Russia. Moreover, Moscow and New Delhi are members of both Shanghai Cooperation Organization (SCO) and BRICS. This could mean that Moscow would not be too worried by New Delhi establishing itself deeper in the Armenian economy. 

Besides, there is also geopolitical thinking which could unite both states. Strategically Armenia is interested in deeper cooperation with India as Azerbaijan and Pakistan form an increasingly close partnership. Yerevan is in conflict with Baku over Nagorno-Karabakh, while Islamabad is the only state in the world which does not recognize Armenia’s independence and therefore fosters close contacts with Azerbaijan.

This broader geopolitical setting explains Armenia’s efforts to foster closer military, technological and generally diplomatic relations with India. For example, in 2017 an Indian delegation headed by Vice President Mohammad Hamid Ansari visited Yerevan where for the first time in 25 years Indians actively discussed the Nagorno-Karabakh conflict.

These overlapping interests of New Delhi and Yerevan could be behind recent decision by the Armenian government to grant India a $40 million deal to supply four India-produced weapon locating radars (‘SWATHI’, which can handle multiple projectiles fired from different weapons at different locations) to Armenia. In this tender Indians has reportedly outbid Russia and Poland. According to the ANI news agency which based its reporting on Indian government sources, “the deal is for supplying four SWATHI weapon locating radars developed by the Defense Research and Development Organization (DRDO) and manufactured by the Bharat Electronics Limited.”

Beyond geopolitics, there is a growing people-to-people contacts between India and Armenia. The latter has become Indians’ one of the favorite destinations for education and employment. Considering Armenia’s small size, the number of Indian citizens that were allowed to reside in the country is substantial. In 2016, 1119 Indian nationals received residency in Armenia, in 2017, 1086 received residency and in 2018, residency status was given to 938 Indian nationals. Throughout most of 2019 the number went downwards with more Indians leaving Armenia than arriving, but as many expect the country will remain an attractive destination for the Indians. 

Azerbaijan

India’s relations with Azerbaijan are mainly driven by political realism. Though Azerbaijan is close to Pakistan, India’s geopolitical rival, in the recent years New Delhi worked hard to tap into Azerbaijan’s advantageous geographic and economic position. 

This is well reflected in the bilateral trade which grew from around US$ 50 million in 2005 to approximately US$ 922 million in 2018. In 2019 the trade turnover constituted some $1.1 billion. Moreover, by 2020, there are over 200 Indian companies operating in Azerbaijan with over US $ 1.2 billion investments, which is much larger than in Georgia or Armenia.

India exports rice, mobile phones, heat exchange units, air and gas compressors/ ventilation units, drugs/human vaccine, cables, plaited cords from ferrous metals without electric isolation, small machines, black tea, insecticide etc to Azerbaijan. Azerbaijan’s export to India, on the other hand, mainly consists of crude oil. Overall, as in the case with Georgia, the bilateral trade is mainly based on products of secondary importance. A much bigger untapped potential exists where India could become Azerbaijan’s major importer of high technologies.

Another potential sphere is military cooperation. Though Azerbaijan purchases most of its weapons from Russia, Baku is nevertheless interested in diversifying its options. India, with its nascent growing capabilities to create military technologies for export across the globe, could become Azerbaijan’s close partner.

There is also an issue of the geopolitics which drives India’s approach to Azerbaijan. The latter strategic location as a starting point in the South Caucasus energy corridor makes the country attractive to India. It is no wonder that a quick growth in bilateral trade between the two states took place when the opening of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline and Baku-Tbilisi-Kars railway materialized. As a result, Indian oil companies have been buying substantive quantities of crude oil from this corridor.

India is also interested in Azerbaijan’s location as the latter lies in the center of the International North-South Transport Corridor (NSTC) which stretched from the Indian territory (through Azerbaijan) to Russia’s Baltic ports. Though the route has yet to show its full potential, ships and railroads to be used along the NSTC would allow India to connect to the European market.

Thus, all South Caucasus states are set to gain exponentially in the economic and in some cases military realms from establishing deeper cooperation with India. There is a clear trend showing that after the end of the Soviet Union, the South Caucasus has never really been a part of India’s active foreign policy, this began to change in the recent past. New Delhi still lacks an overall geopolitical approach (i.e. strategy) towards the South Caucasus and builds its bilateral relations on an ad hoc basis, but the country grows increasingly perceptive of the region’s growing infrastructure which connects the Caspian and Black seas and would allow India to connect to the European market.

This article was published at Caucasus Watch


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Emil Avdaliani

Emil Avdaliani

Emil Avdaliani has worked for various international consulting companies and currently publishes articles focused on military and political developments across the former Soviet sphere.

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